Simultaneous Internal and External Balance

Abstract

The achievement of simultaneous internal and external balance is the prime task of macroeconomic policy in most countries. In some countries there may not be a conflict between the achievement of internal balance and balance-of-payments equilibrium. Circumstances may be such that the goals of full employment and a satisfactory growth rate can be achieved without a balance-of-payments deficit emerging. In many countries, however, the potential conflict between internal and external balance, which was discussed in Chapter 2, materialises frequently. In the United Kingdom the conflict between balance-of-payments equilibrium and faster growth has been acute since the Second World War, and in recent years the achievement of full employment has also become problematical.