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Regulation of a country's balance of payments under global instability

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  • V. Sidenko

Abstract

The article analyzes the evolution of theoretical approaches to the problem of safeguarding external balance in a country's payments, which has exacerbated under the global financial and economic crisis of 2008-09 and the ensuing chronic global instability. The author argues that methods and instruments of policies employed to safeguard external balance of payments must not be standardized and invariable, and that relative significance of different factors shaping BoP is not similar for countries with differing levels of development, market institutions maturity and economic liberalization. External payment imbalances caused primarily by factors of structural origin require regulative solutions associated not with traditional regulation of foreign exchange rates or customs tariffs but with instruments influencing the correction of the structural parameters of the economy as well as consumer preferences inside the country. Globalization and spreading international integration substantially modify conditions for BoP shaping and regulation, producing a considerable increase in the risks of spontaneous changes in relative prices and commercial flows, the virtualization of price-formation at specific global markets, and unexpected movements of major liquid capital stocks. To tackle this problem, it is necessary to enhance ever greater coordination of national macro-economic policies based on the principles commonly agreed at global and regional levels. The obtained results may be used to consolidate the theoretical basis for a policy targeted at BoP regulation under the present-day conditions, especially for countries with explicit structural deformations and high dependence on external markets.

Suggested Citation

  • V. Sidenko, 2014. "Regulation of a country's balance of payments under global instability," Economy and Forecasting, Valeriy Heyets, issue 3, pages 7-19.
  • Handle: RePEc:eip:journl:y:2014:i:3:p:7-19
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