Abstract
Ever since Alexander’s introduction of the ‘absorption’ approach, there has been a certain schizophrenia in balance-of-payments theory. On one hand, the macroeconomic identity that a payments deficit means that expenditures exceed income suggests that analyses of the balance of payments should proceed upon macroeconomic lines. On the other hand, analysis of exchange rate adjustment is, almost by definition, analysis of a relative price change.
The research underlying this paper was supported by the National Science Foundation’s grant to this author, GS-1198. The paper was considerably improved by the helpful comments of James M. Henderson, Harry G. Johnson and Ronald Jones, to whom I am indebted.
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References
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© 1973 Anne O. Krueger
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Krueger, A.O. (1973). The Role of Home Goods and Money in Exchange Rate Adjustments. In: Sellekaerts, W. (eds) International Trade and Finance. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-01269-5_8
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DOI: https://doi.org/10.1007/978-1-349-01269-5_8
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