Abstract
1. In theory, there exists a multitude of highly sophisticated models. In practice, decision-makers (and their advisers) are usually left with a few crude rules of thumb. In the practical business of forecasting the influence of new facts or of new measures on the balance on current account for small countries one is usually left with rules-of-thumb, which may be divided into the three following classes :
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(1)
The elasticity approach (under the assumption of normal behaviour): any kind of revaluation of the domestic currency will help to diminish one’s own surplus on current account ; any kind of devaluation will help to diminish a deficit or will help to improve the balance.
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(2)
The income approach (again under the assumption of normal reactions): Given the leads and lags of different countries compared with the global average in the growth rates of nominal national income - the leading countries will have deficits, the countries lagging behind will have surplusses. Measures to improve the balance on current account increase the risk of unemployment.
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(3)
The macro-absorption approach.
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For other purposes in monetary theory — e.g. the general wealth effects of the “institution” of money — I prefer other concepts, of course.
This is the aggregate marginal propensity to invest summed over all individuals in the economy.
In the event of the existence on a global scale of a deflationary gap or even no gap, i.e. the existence of ‘macro-economic equilibrium’, corresponding examples could be formed.
For further explication of this cf. W. Stützel: Über Währungsspekulanten und den Umgang mit denselben, in: FAZ Nr. 285 vom 7. Dezember 1968, S. 17; reprinted in: W. Stützel: Währung in weltoffener Wirtschaft, Fritz Knapp Verlag, Frankfurt 1973, S. 133 ff.
Over the last few years the marked increase of transfers by ‘guest workers’ to their home countries has stood in contrast to this tendency. This is a structural compenent. With the approach being discussed here it can be grasped just as little as the eminently important influence of the surplusses or deficits of public authorities as sectoral parts of the national surplusses or deficits.
Some of these forecasts have been published; cf W. Stützel, über einige Währungstheorien, Tübingen 1969, p. 18
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© 1976 Springer-Verlag Berlin · Heidelberg
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Stützel, W. (1976). How to Forecast and to Explain the Balances on Current Account of Small Countries?. In: Frisch, H. (eds) Inflation in Small Countries. Lecture Notes in Economics and Mathematical Systems, vol 119. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-46331-0_11
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DOI: https://doi.org/10.1007/978-3-642-46331-0_11
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