IDEAS home Printed from
   My bibliography  Save this paper

The Malaysian Balance of Payments:Keynesian Approach Versus Monetary Approach


  • Jarita Duasa


There are two competing theories of balance of payments: the Keynesian and the monetary theories. Each of the two approaches provides distinct explanations on how the determinants of the balance of payments could lead to equilibrium and disequilibrium of the balance of payments account and both theories also rank differently the importance of real/merchandise account and monetary/official reserve transactions balance account of the balance of payments. The paper aims to examine the two theories on Malaysian balance of payments based on two tests: test of correctness of signs of regressors and test of speed adjustment. The results show that signs of regressors of the Trade Balance (TB) equation support the Keynesian view while signs of regressors of the Official Reserve Transactions Balance (ORTB) equation support both Keynesian and Monetary views. It is also found that the ORTB dominates the TB in terms of quickness of adjustment, so the ORTB is an autonomous account and the TB is an accommodating accoun

Suggested Citation

  • Jarita Duasa, 2004. "The Malaysian Balance of Payments:Keynesian Approach Versus Monetary Approach," Computing in Economics and Finance 2004 26, Society for Computational Economics.
  • Handle: RePEc:sce:scecf4:26

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Rich, Georg, 1990. "Exchange-rate management under floating exchange rates : A skeptical Swiss view," Journal of Banking & Finance, Elsevier, vol. 14(5), pages 993-1021, November.
    2. Ramaprasad Bhar & A. G. Malliaris, 2015. "Volume and Volatility in Foreign Currency Futures Markets," World Scientific Book Chapters,in: THE WORLD SCIENTIFIC HANDBOOK OF FUTURES MARKETS, chapter 5, pages 103-123 World Scientific Publishing Co. Pte. Ltd..
    3. Boadway, R. & Flatters, F., 1991. "Malaysia's Balance of Payments: What is the Problem? How Serious is It?," Papers 2, Malysian Institute of Economic Research-.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Keynesian theory; Monetary theory; Trade Balance; Official Reserves Transaction Balance.;

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • E0 - Macroeconomics and Monetary Economics - - General
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sce:scecf4:26. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.