The IMF Monetary Model at Forty

20 Pages Posted: 15 Feb 2006

See all articles by Jacques Polak

Jacques Polak

International Monetary Fund (IMF)

Date Written: April 1997


A model reflecting the monetary approach to the balance of payments was developed in the International Monetary Fund (IMF) in the 1950s. Its purpose was to integrate monetary, income, and balance of payments analysis, and it became the basis of the conditionality applied to IMF credits. Extremely simple, with primary focus on the balance of payments effects of credit creation by the banking system, the model has retained its usefulness for policy purposes over time, as it was adapted to changes in member countries` priorities and in the international monetary system, in particular the disappearance of the par value system.

Keywords: monetary approach to the balance of payments, demand for money, econometric models, IMF

JEL Classification: B23, C30, E52, F41

Suggested Citation

Polak, Jacques, The IMF Monetary Model at Forty (April 1997). IMF Working Paper No. 97/49, Available at SSRN:

Jacques Polak (Contact Author)

International Monetary Fund (IMF) ( email )

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