Economics, Econometrics and Finance
8 years ago

New model reveals key factors shaping global economic balance.

Journal of Economic Integration
A Synthesis of the Keynesian and Monetarist Approaches to the Short-run Theory of the Balance of Payments
Pekka Ahtiala

Paper Summary

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The article combines Keynesian and Monetarist theories on balance of payments into a general model. Monetarist ideas come from perfect capital mobility, while Keynesian views stem from neutral monetary policy. Both approaches are separate but related, with Monetarist effects needing extra assumptions. The orthodox neutral monetary policy version includes the basic Monetarist model. The Monetarist approach is not a long-term theory.