Review of the theoretical approaches to external adjustment and their relevance for Latin America

The problem of adjustment to external imbalances has become a focus of the attention of economists in Latin America. Various analytical approaches to this problem have been proposed. The current account approach places the emphasis on international trade; the capital account approach places it on financial flows, w hile the monetarist approach of the balance of payments is based on the global balance of international payments. Each of these approaches gives rise to a set of economic policy measures.