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"A Model of the Balance of Payments," Journal of International Economics, 1979.

Paper: pdf file Abstract
A model of the balance of payments is presented in this paper in which stock and flow effects are completely integrated. The model accounts for all flows of funds in the system and allows for the endogenous determination of the exchange rate. The model is first outlined in general terms and then a particular `quasi-empirical' version of it is analyzed by means of simulation techniques. The results of analyzing this version show the likely importance of accounting for capital flows and price linkages amoung countries in the construction of multicountry econometric models.

Comments
The theory that has guided the specification of my multicountry econometric model is presented in this paper. A discussion and extension of this work is in Chapter 2, Section 2.2, in 1994#2. An earlier discussion of this work is in Chapter 3, Section 3.2, and the notes on page 462 in 1984#2