Domestic Stabilisation and the Balance of Payments

Abstract

The purpose of this chapter is to consider the general principles to be followed by countries adopting national policies for the domestic stabilisation of their economies and in conducting their external financial relationships with other countries. The term domestic stabilisation refers to a level of high and stable economic activity — full employment — to be maintained and combined, if not with exact stability of some stated price index, at least with only a moderate, steady, nonexplosive rise in the general level of prices — to be called the control of inflation.

This chapter is reprinted here with the permission of the author and is based on a lecture given at the Institut für Wirtschaftsforschung-Hamburg in 1980. Some minor editorial changes have been made [Editor].