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Disequilibrium in the International Balance of Payments


  • Russell Jesse R.


Recent years have seen a problematic upward trend in disequilibrium in the international balance of payments. What accounts for this trend? Three hypotheses for the rise in disequilibrium are tested in this paper: greater fixedness of the world exchange rate regime causes greater disequilibrium; greater flexibility of the exchange rate regime causes greater disequilibrium; and a decline of United States economic hegemony causes greater disequilibrium. It is argued here that the problem was created by state choices, a lack of coordination among states in the international system, and the absence of an international exchange rate regime. The evidence presented in this paper supports the idea that a stable international exchange rate regime is critical to secure a healthy world economy.

Suggested Citation

  • Russell Jesse R., 2012. "Disequilibrium in the International Balance of Payments," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 18(1), pages 1-17, May.
  • Handle: RePEc:bpj:jeehcn:v:18:y:2012:i:1:n:3

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    References listed on IDEAS

    1. Richard N. Cooper, 2006. "Understanding global imbalances," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 51.
    2. Leo de Haan & Hubert Schokker & Anastassia Tcherneva, 2008. "What Do Current Account Reversals in OECD Countries Tell Us About the US Case?," The World Economy, Wiley Blackwell, vol. 31(2), pages 286-311, February.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2004. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 1-48.
    4. Michael D. Bordo & Harold James, 2000. "The International Monetary Fund: Its Present Role in Historical Perspective," NBER Working Papers 7724, National Bureau of Economic Research, Inc.
    5. Cohen, Benjamin J., 1982. "Balance-of-payments financing: evolution of a regime," International Organization, Cambridge University Press, vol. 36(02), pages 457-478, March.
    6. Thomas D. Willett, 2007. "Why the Middle is Unstable: The Political Economy of Exchange Rate Regimes and Currency Crises," The World Economy, Wiley Blackwell, vol. 30(5), pages 709-732, May.
    7. Gould, Erica R., 2003. "Money Talks: Supplementary Financiers and International Monetary Fund Conditionality," International Organization, Cambridge University Press, vol. 57(03), pages 551-586, June.
    8. W. Max Corden, 2007. "Those Current Account Imbalances: A Sceptical View -super-1," The World Economy, Wiley Blackwell, vol. 30(3), pages 363-382, March.
    9. repec:hrv:faseco:34721963 is not listed on IDEAS
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