The global monetaristic variant of the monetary approach to the balance of payments: an empirical study of the Netherlands

Summary The global monetaristic variant of the monetary approach in which the characteristic of the balance of payments being an essentially monetary phenomenon comes to the fore most strongly has been tested. Criticism of a theoretical nature regarding the monetary approach appears not to hold good for this variant. From the characteristics a reduced-form equation for the rate of growth of the stock of international monetary reserves has been derived. Moreover, simultaneous-equation systems have been developed to give substance to a possible mutual influencing of the variables in the money stock equation resulting from a sterilization policy. Estimations lead to a rejection of this variant for the Netherlands.My thanks are due to the members of the International Economics Section of Groningen State University for their comments and suggestions.