The Two Monetary Approaches to the Balance of Payments: Keynesian and Johnsonian

In the 1950s and 60s, a number of new approaches were developed with the aim of understanding better the sequences of economic events that could lead countries into balance of payments problems and the policy measures that could prevent or correct such problems. Two places in particular where these intellectual activities flourished were the Research Department of the International Monetary Fund and the Department of Economics of the University of Chicago. The London School of Economics should probably be mentioned in the same breath, in as much as Harry G. Johnson, with whose name these activities are inexorably linked, taught the new gospel in both places as a commuting professor.