Oil Payments and Oil Debt and the Problem of Adjustment
It is still uncertain whether the world economy can adjust to the sharp rise in oil prices without a major loss of output. It is, in other words, uncertain whether all the main aspects of the new situation are sufficiently understood. This chapter deals with four of these aspects: (i) the transfer mechanism, (ii) the nature of the payments problem, (iii) the implications for the oil-importing countries of the large external debt they will have to carry and (iv) their structural adjustment to the higher level of oil prices.1
KeywordsCurrent Account Domestic Currency Financial Transfer Real Asset Payment Problem
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Notes and References
- 17.For example it is stated in Richard N. Cooper, “Liquidity and Payments Adjustment”, in International Reserves (Washington: International Monetary Fund, 1970) pp. 127–28, that “the rationale for reserves to finance imbalances arises from the real cost associated with adjustment or, when adjustment is unavoidable, from speedy adjustment”.Google Scholar