Trade, Money and International Payments

Paul Davidson

Chapter 5 in International Money and the Real World, 1982, pp 96-108 from Palgrave Macmillan

Abstract: Abstract In order to systematically analyse the role of finance and money in any NUMS, we must restrict our vision to a single cause of payments’ imbalance at any one time. Although the items in the balance of payments are, via the system of double-entry bookkeeping, interconnected so that, for example, a positive overall balance on ‘current accounts’ must be offset by a negative balance on the ‘capital accounts’, it is essential for clear analysis to deal with imbalances in one subset of accounts at a time. Traditionally, economists have delved most deeply into the problem of an adverse balance of trade, i.e. where B > 0. When the value of imports exceeds that of exports (VM > VX), the domestic economy has to finance a deficit in its balance of international payments with the rest of the world. This, then, is the problem which we shall analyse in some detail in this chapter.1

Keywords: Trading Partner; Trade Deficit; International Reserve; Contractual Obligation; Asset Holding (search for similar items in EconPapers)
Date: 1982
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DOI: 10.1007/978-1-349-16679-4_5

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