Towards a General Theory of the Balance of Payments1
HARRY G. JOHNSON
The theory of the balance of payments is concerned with the economic determinants of the balance of payments, and specifically with the analysis of policies for preserving balance-of-payments equilibrium. So defined, the theory of the balance of payments is essentially a post-war development. Prior to the Keynesian revolution, problems of international disequilibrium were discussed within the classical conceptual framework of ‘the mechanism of adjustment’—the way in which the balance of payments adjusts to equilibrium under alternative systems of international monetary relations—the actions of the monetary and other policy-making authorities being subsumed ...
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