ABSTRACT
A third source of payments imbalance is to be found on the asset account and stems from the many kinds of changes and disparities that can arise either in the demand and structure of demand for holding assets, or in the conditions of their supply. The main common feature, perhaps, of such sources of imbalance is their almost complete neglect in the literature, although their importance is growing with the growth of the international market in assets. In general, an autonomous imbalance on the asset account of the balance of payments has no direct impact on the current account. 1 It affects asset prices and so sets in motion the equilibrating adjustments discussed in chapter 8, leading to equilibrating flows of assets and/or to changes in the net balance of exports and imports. In the last section of the last chapter we discussed the phenomenon of current-account imbalance created to offset and equilibrate a primary imbalance on the capital account; in the following we shall discuss a few more examples of primary imbalance on the capital account.
