Balance-of-payments policy. Instruments and criteria

Abstract

In this article the author makes clear that in principle targets of economic policy can serve as criteria for balance of payments policy. The instruments of balance of payments policy are discussed in the light of their practical implications. Exchange rate policy is treated as a means of incomes policy. The author argues that only equilibrium of the balance of payments can be considered as a long term criterium for balance of payments policy in the case of stable exchange rates. In the case of flexible exchange rates the criterium can be found in the degree of domestic economic stability.