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The Monetary Approach to the Balance of Payments (Collected Works of Harry Johnson) by Harry G. Johnson, Jacob A. Frenkel

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13

Aspects of the Monetary Approach to Balance-of-Payments Theory

An Empirical Study of Sweden1

A. HANS GENBERG

INTRODUCTION

In this chapter we shall attempt to provide an empirical analysis of some aspects of the monetary approach to balance-of-payments theory. We shall concentrate on a few but in our view crucial hypotheses regarding the nature of a small economy and its relationship with the world at large.

Firstly we take up the question of goods and asset market integration in the world. This is one of the building blocks of the monetary approach which stresses the importance of world rather than individual country equilibrium in the determination of prices and interest rates. Secondly we discuss the link between reserve flows and the domestic ...

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