ABSTRACT
This chapter explores the source of changes in the autonomous items in the balance of payments, which cause either payment disequilibria or fluctuations in a floating exchange rate regime. Conditions that generate a balance of payments surplus in the fixed exchange rate world would cause a currency appreciation if the exchange rate was flexible. The chapter also examines why some countries frequently have a deficit (or depreciating currencies) while others seem to experience prolonged surpluses (or appreciating currencies).
