The Balance of Payments *

In the past twenty years, there has been a great deal of change in the theoretical approach to balance-of-payments problems and the mechanism of adjustment. This has been associated, on the one hand, with the Keynesian revolution, which led to the formulation of theories in terms of disequilibrium rather than equilibrium and, on the other hand, with the prevalence of balance-of-payments problems particularly in the post-war period. Very briefly, the change has been from the idea of a mechanism of adjustment to the idea of the balance of payments as a policy problem.