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Capital Mobility and Devaluation in a Monetary Approach to the Balance of Payments

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  • Lapan, Harvey
  • Enders, Walter

Abstract

Judging by recent issues of this, and other Journals, there is still a keen interest in determining the causes of, and cures for, Balance of Trade and Payments disequilibria. The emergence of the Portfolio Balance Approach—'' has led to viewing Balance of Trade deficits and surpluses as caused by discrepancies between desired and actual wealth holdings, and Balance of Payments deficits (surpluses) as caused by discrepancies between desired and actual money holdings. Thus, Balance of Trade and Payments deficits and surpluses are viewed as representing disequilibrium within the asset markets. Within this framework several authors have asked what self-correcting tendencies exist and whether a devaluation facilitates any tendency towards self-correction.

Suggested Citation

  • Lapan, Harvey & Enders, Walter, 1976. "Capital Mobility and Devaluation in a Monetary Approach to the Balance of Payments," ISU General Staff Papers 197601010800001033, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:197601010800001033
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    References listed on IDEAS

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    1. Enders, Walter, 1975. "Portfolio Balance And Exchange Rate Stability," ISU General Staff Papers 197503010700001005, Iowa State University, Department of Economics.
    2. Frenkel, Jacob A & Rodriguez, Carlos Alfredo, 1975. "Portfolio Equilibrium and the Balance of Payments: A Monetary Approach," American Economic Review, American Economic Association, vol. 65(4), pages 674-688, September.
    3. Johnson, Harry G., 1972. "The Monetary Approach to Balance-of-Payments Theory," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 7(2), pages 1555-1572, March.
    4. Aghevli, B. B. & Borts, G. H., 1973. "The stability and equilibrium of the balance of payments under a fixed exchange rate," Journal of International Economics, Elsevier, vol. 3(1), pages 1-20, February.
    5. Ronald W. Jones & W. Max Corden, 1976. "Devaluation, Non-Flexible Prices, and the Trade Balance for a Small Country," Canadian Journal of Economics, Canadian Economics Association, vol. 9(1), pages 150-161, February.
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    Cited by:

    1. Enders, Walter, 1977. "An Argument Against Monetary Independence in a Flexible Exchange Rate Regime," ISU General Staff Papers 197703010800001053, Iowa State University, Department of Economics.

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