Regional Payments Mechanisms: The Case of Puerto Rico

Regional Payments Mechanisms: The Case of Puerto Rico

Regional Payments Mechanisms: The Case of Puerto Rico

Regional Payments Mechanisms: The Case of Puerto Rico

Excerpt

This study grew out of an earlier interest in the process through which state and regional balances of payments are adjusted within the continental United States. The lack of data for estimation of balances of payments for a state or region has led to several attempts to use the data on regional flows of funds, as collected and issued by the Interdistrict Settlement Fund of the Federal Reserve System, for the analysis of regional adjustments. However, it soon became apparent that these data were not much help. In this study I have treated Puerto Rico as a region of the United States, and I have sought to analyze the process of adjustment in the Puerto Rican balance of payments in the hope that something would be learned about regional payments mechanisms within the United States, and perhaps even about payments mechanisms in a customs union such as the European Economic Community.

Although this is a study of regional payments adjustments, the approach and method of analysis is that of international economics. I treat Puerto Rico as if she were a nation and make use of international trade analogies throughout the book.

This book contains three separate but closely related parts. First, it contains estimates of the gross flows of funds to and from Puerto Rico for three fiscal years, 1958, 1959, and 1960. These flows are analogous to the flows of funds among Federal Reserve districts, but the Puerto Rican data are superior in several respects. The basis and method of estimation are described in Chapter II and its appendix. Second, Chapters III-V contain an analysis of Puerto Rico's postwar balance-of-payments experience. Since 1946 Puerto Rico has received a massive inflow of . . .

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