Staff Papers

[Front Matter and Table of Contents]: The table of contents and editorial information for the 1962 IMF Staff Papers, Volume IX. It lists articles on international coordination, balance of payments asymmetries, the Yugoslav economy, and the impact of inflation on investment. [Publication Information and Subscription Details]: Editorial committee listing and subscription information for the IMF Staff Papers, including pricing and contact details for the Secretary of the International Monetary Fund. [International Coordination of Economic Policy: Introduction and Terms of Reference]: J. J. Polak introduces a paper on the international coordination of economic policy, originally prepared for the Netherlands Economic Society. He outlines the terms of reference concerning the compatibility of national objectives like price stability and growth with international norms and the role of organizations like the IMF and OECD. [International Coordination of Economic Policy: Summary and Section I]: Polak argues that international coordination is driven by a desire to limit the use of specific policy instruments rather than differences in national objectives. He discusses the distinction between targets (variables we care about) and instruments (variables we manipulate), noting that exchange rate stability is often treated as a primary target in itself. [National Objectives and the Role of the Balance of Payments]: This section explores how countries use balance of payments fluctuations as a buffer to achieve domestic goals without overusing policy instruments. Polak compares the balance of payments to a budget stabilizer and argues that fixed exchange rates imply a rejection of balance of payments equilibrium as a primary target, favoring it instead as a means of absorbing shocks. [Analysis of Postwar Balance of Payments Deficits and Surpluses]: Polak provides empirical data (Tables 1 and 2) showing that postwar balance of payments deficits in industrial countries were generally small relative to GNP (1-3%) and often reversible through moderate fiscal and monetary policies without causing significant domestic deflation. He critiques the view that wage policy is the only available tool for restoring equilibrium. [Theory and Practice of International Action]: The author critiques the theoretical models of Tinbergen and Posthuma regarding the centralization of economic instruments. Polak argues that international coordination is often unnecessary because countries have sufficient tools to insulate themselves from foreign shocks, and that coordination is only feasible for specific, measurable government actions. [Coordination of Specific Policies: Exchange Rates and Trade]: Polak examines successful coordination in exchange rates (via the IMF) and trade barriers (via GATT and OEEC). He identifies four conditions for success: specific rules, objective tests, concrete governmental measures, and obvious effects on other countries. He notes the difficulty of coordinating internal revenue duties compared to customs duties. [The Failure of International Full Employment Pledges]: Polak analyzes why international efforts to enforce a 'full employment pledge' through the United Nations and ECOSOC failed. He concludes that because countries already prioritize employment nationally, there is no additional 'give' for international pressure to influence these deeply domestic compromises between employment, inflation, and balance of payments. [Coordination of Wage, Price, and Interest Rate Policies]: Polak discusses the potential for coordinating wage, price, and interest rate policies. While skeptical of international price or wage targets, he highlights interest rates as a key area for coordination due to the emergence of large-scale capital movements. He compares the financial integration of industrial countries to the historical integration of the US Federal Reserve districts. [General International Cooperation and Consultation]: The final section of the chunk emphasizes the importance of informational cooperation and consultation. Polak describes how IMF consultations help harmonize policies in their formative stages and distinguishes between true policy coordination and the broader field of international activity aimed at information sharing and technical assistance. [The International Monetary System and the Role of the Fund]: This section examines the international monetary system's management of balance of payments disequilibria through the IMF. It discusses the tension between national independence and international discipline, comparing the Fund's credit mechanism to a mitigated version of the gold standard. The text details the evolution of Fund policies regarding 'temporary use' of resources, the lack of pressure on surplus countries compared to deficit countries, and the limited ability of international liquidity management to counter global inflationary or deflationary trends, placing primary responsibility on industrial nations. [Appendix: Objectives and Instruments in Economic Policy]: An appendix applying Tinbergen's economic policy model to a multi-country system. It argues that N countries can achieve objectives of full employment, price stability, and balance of payments equilibrium if they have sufficient instruments, including exchange rates. It notes the necessity of one country (historically the United States) acting without its own balance of payments objective to absorb the net positions of others, while raising technical reservations about the stability of such a system under flexible rates. [Résumé and Resumen (French and Spanish Summaries)]: French and Spanish summaries of the preceding article. They highlight the distinction between economic objectives and instruments, the role of the IMF as a managed successor to the gold standard, and the conclusion that international coordination is most effective for specific measures like exchange rates rather than broad national goals like full employment. [Asymmetries Between Balance of Payments Surpluses and Deficits: Introduction]: Poul Høst-Madsen introduces a study on the conceptual asymmetries between balance of payments surpluses and deficits. He distinguishes between 'basic' and 'over-all' balances and argues that no true symmetry exists between the two because of differing national definitions and the structural role of gold and private foreign exchange holdings. The introduction sets the stage for analyzing how these asymmetries, particularly in reserve centers like the US and UK, affect international payments and policy targets. [Concepts of Surplus or Deficit and National Practices]: This section provides a detailed breakdown of 'basic' vs. 'over-all' balance of payments concepts and surveys the practices of major industrial countries. It explains how gold, foreign exchange assets, and liabilities are treated differently across nations (e.g., Japan's extreme over-all view vs. the UK's basic balance focus). It highlights the critical asymmetry where private foreign exchange assets are often excluded from surplus/deficit measures while corresponding liabilities are included by reserve centers, potentially creating a global excess of deficits. [V. Some Major Asymmetries and Their Effect]: This section analyzes the impact of asymmetrical classifications in balance of payments items between 1959 and 1961, specifically focusing on how transactions with the IMF, gold, and private short-term assets create discrepancies between global surpluses and deficits. It argues that while some asymmetries are temporary, the differing treatment of private foreign exchange assets by creditors and debtors may have persistent effects on international liquidity and national policy targets. [APPENDIX: How Can the Asymmetry of Concepts of Imbalance Affect Stability of Payments?]: The appendix provides a theoretical analysis of how conflicting national balance of payments targets and asymmetrical concepts of imbalance affect global stability. It uses hypothetical conditions involving gold settlements to demonstrate how an excess of ex-ante surpluses over ex-post results can lead to contractionary or restrictive economic measures across nations. [RESUME and RESUMEN (Summaries of Balance of Payments Study)]: French and Spanish summaries of the preceding article regarding the classification of 'basic' and 'overall' balance of payments surpluses and deficits, noting the asymmetrical treatment of private foreign exchange holdings and its potential to disrupt international payments. [The Yugoslav Economic System]: An in-depth examination of the Yugoslav economic system as of 1962, detailing its transition from a Soviet-style command economy to a decentralized system based on social ownership and workers' self-management. The authors describe the roles of the Federation and Communes, the function of Workers' Councils in enterprises, the unique profit-sharing wage system, and the mechanisms of central planning through fiscal and credit policy rather than direct intervention. It also covers the agricultural sector, where private ownership persists alongside cooperatives, and the complexities of the banking system and investment financing. [RESUME and RESUMEN (Yugoslav Economic System)]: French and Spanish summaries of the Fleming and Sertic article on the Yugoslav economic system, highlighting the 1961 exchange rate and trade reforms and the unique role of the central bank in a decentralized socialist economy. [The International Coffee Market: a Note]: Gertrud Lovasy analyzes the structural surplus in the international coffee market during the early 1960s. The paper details the coffee cycle, the gestation period of trees, and the inelasticity of demand that leads to price volatility. It evaluates various policy responses to the surplus, including free market compensation schemes, multilateral long-term contracts, and export quota agreements. Lovasy concludes that a quota-based system, supported by importing countries and coupled with production controls, is the most viable interim solution to maintain export earnings for producing nations like Brazil, Colombia, and various African states. [The Impact of Inflation on the Composition of Private Domestic Investment]: A.S. Shaalan investigates how inflation distorts the 'investment mix' in developing economies. The paper argues that inflation increases illiquidity risk and uncertainty, leading investors to favor physical assets (like inventories and luxury housing) over financial assets and long-term productive fixed capital. Through empirical analysis of Argentina, Chile, and Colombia, the author demonstrates that high inflation often correlates with lower marginal output/capital ratios, suggesting a misallocation of resources toward less efficient, short-term investments. [The Fund Agreement in the Courts—VII]: Joseph Gold continues his series on the legal application of the IMF Articles of Agreement. This installment covers several landmark cases: Kolovrat v. Oregon (U.S. Supreme Court) regarding inheritance and exchange control; Banco do Brasil v. A.C. Israel Commodity Co. (New York) on the affirmative enforcement of exchange surrender requirements; and Moojen v. Von Reichert (France) which provides a detailed interpretation of 'exchange contracts' and 'unenforceability' under Article VIII, Section 2(b). The article examines how courts in different jurisdictions (USA, Germany, France, Canada) treat foreign exchange regulations in light of international treaty obligations.