Skip to main content
Log in

Jacques J. Polak and the Evolution of the International Monetary System

  • Published:
IMF Economic Review Aims and scope Submit manuscript

Abstract

Jacques J. Polak influenced the evolution of the international financial system, including by developing a seminal monetary model of the balance of payments that could be applied empirically in developing countries; by making essential contributions to the design and development of the SDR; and through his research publications on a variety of theoretical and empirical topics relevant to international economic and financial policies. This paper summarizes his life and assesses his professional output.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. From the inception of the Fund in 1946, the legal staff had the title of Counsellor (later shortened to “Counsel”), and the director of the Legal Department held the title of General Counsel. Polak was the only department director to be awarded the additional title of Counsellor until 1979. After his retirement, subsequent directors of research were usually also given the title of Economic Counsellor, but without the rather regal “The” preceding it.

  2. For a fairly comprehensive compilation of Polak's published articles from 1937 through 1979, see Polak (1979). That collection omits some minor publications such as comments on articles by others, but it includes several internal IMF documents that Polak authored and that were not otherwise published. Two subsequent collections—Polak (1994) and Boughton (2005)—reproduced his main articles through 2004.

  3. Remarks at an anniversary conference in Madrid, Spain, September 29, 1994; in Boughton and Lateef (1995, p. 2).

  4. The use of “United Nations” in UNRRA (established in 1943) and in the official title of what became known as the Bretton Woods conference of 1944 was not a reference to the organization that succeeded the League of Nations. The UN came into being only in 1946. The reference was to the group of countries fighting as allies against the Axis in World War II.

  5. The foundation, named for the IMF's third Managing Director (1956–63), sponsors a series of usually annual lectures on the international financial system by leading participants or analysts. See www.perjacobsson.org/.

  6. This statement concerns only the national delegations, not other individuals who might have been present at Bretton Woods in other capacities. The claim would be difficult to prove beyond any doubt, but it is based on an extensive search undertaken in 1994 in preparation for the fiftieth anniversary of the Bretton Woods conference. At that time, I identified and located 18 surviving delegates through personal inquiries to known participants, searches of obituary archives and internet sites, and formal inquiries to national authorities through the offices of IMF Executive Directors. From 1995 through 2009, all of those delegates passed away except for Polak. The penultimate survivor was Raymond Mikesell, a member of the U.S. delegation.

  7. See “Paraguay—Exchange Reform and Stand-by Arrangement,” EBS/57/41 (July 23, 1957); “Paraguay—Proposals for Exchange Reform,” EBS/57/41, Supplement 1 (July 24, 1957); Paraguay—Request for a Stand-by Arrangement,” EBS/57/41, Supplement 2 (July 25, 1957); and minutes of EBM/57/40 (July 29, 1957). These documents are available at the IMF archives. For access procedures, see www.imf.org/external/np/arc/eng/archive.htm.

  8. Polak's own empirical tests of the model used data from both developing and advanced economies, but the practical application was to the former.

  9. See, in particular, the introductory essays in Frenkel and Johnson (1976) and IMF (1977). Oddly, Frenkel and Johnson noted what they described as a “short-lived burst of theoretical interest” in the monetary approach at the IMF (p. 31) and cited only a 1961 paper by Sigbert Jon Prais, with no mention of Polak.

  10. For a simplified derivation of the reduced forms, see Polak (2002).

  11. The 1957 stand-by arrangement with Paraguay, which was fairly typical for its time, allowed Paraguay to draw on the loan commitment during a one-year period, subject to policy conditions that were specified initially for a six-month period and that were to be renegotiated for the remaining period before the end of the first six months. Each disbursement was to be repaid within three years. The text of the arrangement was set out in Attachment I to “Paraguay—Request for a Stand-by Arrangement,” EBS/57/41, Supplement 2 (July 25, 1957).

  12. For a review of the evolution of exchange rate theory and modeling at the IMF, see Polak (1995).

  13. For a comparative analysis of these models, see Boughton (2006).

  14. For a summary of the academic debate, see de Vries (1976, pp. 17–21). The culmination of the discussions was the report of the Bellagio Group; see Solomon (1977) and Connell (2010).

  15. In September 1963, Polak circulated a list of eight studies on international liquidity that were being prepared within the department. These individuals were listed as the principal authors of five of the papers. A sixth was being prepared by the Balance of Payments Division, and two were as yet unassigned. See attachment to memorandum from Polak to Fleming and Altman, “Management of Liquidity” (October 7, 1963). IMF Archives, Bureau of Statistics Immediate Office files (BURAI subject files), box 37, file 2.

  16. The deputies’ report, listing Polak (but not Gold) as an observer, was attached as an annex to Group of Ten (1964).

  17. For a detailed review, see Mussa, Boughton, and Isard (1996).

  18. In 1983, the GAB agreement was amended to permit its activation for loans to non-G10 countries.

  19. See de Vries (1976, pp. 53–7); and Solomon (1977), Chapter 4. The relevant portions of Bernstein's paper are reproduced in Fleming (1964a). Fleming (1964b) and Mohammed (1965) examined the Bernstein scheme in comparison with similar proposals made by others.

  20. For a comprehensive exposition by Fleming on the liquidity of Fund liabilities, see Fleming (1961).

  21. A revised version of that paper was later published as Fleming (1964b).

  22. Under the original Articles of Agreement, a country's gold tranche was the amount of gold that it had deposited in the Fund as a capital subscription, less any outstanding obligations. Each member country could borrow reserve currencies unconditionally up to the amount of its gold tranche. Fleming's proposal would have extended that right into a portion of the capital subscription that had been paid in the form of the country's own currency.

  23. Schweitzer's views and proposals are explained in de Vries (1976, pp. 64–9).

  24. Group of Ten (1965), paragraph 120. The Ossola group was a subdeputy level committee appointed by the G10 deputies to study the possibilities for specific reforms. The Fund was represented by two observers, Fleming (Polak's deputy) and Nicoletopoulos (Gold's deputy).

  25. The history of the substitution account, and Polak's role in developing it, is covered in Boughton (2001, pp. 936–43).

  26. See Boughton (2001, pp. 574–78) (on targeting the real exchange rate) and 604–05 (on the proliferation of policy conditions).

  27. Interview with the author (August 28, 1996).

  28. Items listed as in the IMF archives and other internal IMF documents may be accessed by following the procedures specified at www.imf.org/external/np/arc/eng/archive.htm. The joint library of the IMF and the World Bank holds Polak's collected papers, the G10 documents cited here, and all or most of the publications on this list. For access, see www.external.worldbankimflib.org/external.htm.

References

Items listed as in the IMF archives and other internal IMF documents may be accessed by following the procedures specified at www.imf.org/external/np/arc/eng/archive.htm. The joint library of the IMF and the World Bank holds Polak's collected papers, the G10 documents cited here, and all or most of the publications on this list. For access, see www.external.worldbankimflib.org/external.htm.

  • Alexander, Sidney S., 1952, “Effects of a Devaluation on a Trade Balance,” IMF Staff Papers, Vol. 2 (April), pp. 263–278.

    Article  Google Scholar 

  • Boughton, James M., 2001, Silent Revolution: The International Monetary Fund 1979–1989 (Washington, International Monetary Fund).

    Google Scholar 

  • Boughton, James M., 2002, “Why White, Not Keynes? Inventing the Post-War International Monetary System,” in The Open-Economy Macro-Model: Past, Present and Future, ed. by Arie Arnon and Warren Young (Dordrecht, Kluwer Academic Publishers).

    Google Scholar 

  • Boughton, James M., 2003, “On the Origins of the Fleming-Mundell Model,” IMF Staff Papers, Vol. 50, No. 1, pp. 1–9.

    Article  Google Scholar 

  • Boughton, James M., (ed.) 2005, Economic Theory and Financial Policy: Selected Essays of Jacques J. Polak 1994–2004 (Armonk, New York, M. E. Sharpe).

    Google Scholar 

  • Boughton, James M., 2006, “Different Strokes? Common and Uncommon Responses to Financial Crises,” in IMF-Supported Programs: Recent Staff Research, ed. by Ashoka Mody and Alesandro Rebucci (Washington, International Monetary Fund), Chapter 8.

    Google Scholar 

  • Boughton, James M., and K.Sarwar Lateef, eds. 1995, Fifty Years after Bretton Woods: The Future of the IMF and the World Bank (Washington, International Monetary Fund and World Bank Group).

    Google Scholar 

  • Connell, Carol, 2010, “Why Economists Disagree: A Case Study in Consensus Building,” manuscript, Available via the Internet www.econ.as.nyu.edu/docs/IO/16663/Connell_2010Oct18.pdf (accessed January 3 2011).

  • de Vries, Margaret Garritsen, 1976, The International Monetary Fund 1966–1971: The System Under Stress (Washington, International Monetary Fund).

    Google Scholar 

  • Fleming, John Marcus, 1961, “International Liquidity: Ends and Means,” IMF Staff Papers, Vol. 8 (December), pp. 439–463.

    Article  Google Scholar 

  • Fleming, John Marcus, 1963, “Role of the International Monetary Fund in the Provision of International Liquidity,” IMF Departmental Memorandum DM/63/63 (December 31).

  • Fleming, John Marcus, 1964a, “International Reserve Units’ Compared with Gold Tranche Positions in the Fund,” IMF Departmental Memorandum DM/64/19 (March 16).

  • Fleming, John Marcus, 1964b, “The Fund and International Liquidity,” IMF Staff Papers, Vol. 11, pp. 177–215.

    Article  Google Scholar 

  • Fleming, John Marcus, 1966, “Towards Assessing the Need for International Reserves,” IMF Departmental Memorandum DM/66/38 (July 6).

  • Frenkel, Jacob A., and Harry Johnson, 1976, The Monetary Approach to the Balance of Payments (London, Allen and Unwin).

    Google Scholar 

  • Frenkel, Jacob A., Morris Goldstein, and Mohsin S. Khan, 1991, “Major Themes in the Writings of Jacques J. Polak,” in International Financial Policy: Essays in Honor of Jacques J. Polak, ed. by Jacob A. Frenkel and Morris Goldstein (Washington, International Monetary Fund, in association with De Nederlandsche Bank), pp. 3–57.

    Google Scholar 

  • Group of Ten, 1964, Ministerial Statement of the Group of Ten and Annex Prepared by the Deputies (Group of Ten).

  • Group of Ten, 1965, Report of the Study Group on the Creation of Reserve Assets (Group of Ten).

  • International Monetary Fund, 1964a, “The Inclusion of Gold Tranche Poition in Reserve Statistics,” Departmental Memorandum DM/64/10 (February 19).

  • International Monetary Fund, 1964b, “Reserve Creation through the International Monetary Fund,” Departmental Memorandum DM/64/39 (July 6).

  • International Monetary Fund, 1965, “Distribution of Deliberately Created Reserves,” Staff Memorandum SM/65/100 (December 8).

  • International Monetary Fund, 1966, “The Need for Reserves: An Exploratory Paper,” Staff Memorandum SM/66/9 (January 14).

  • International Monetary Fund, 1977, The Monetary Approach to the Balance of Payments (Washington, International Monetary Fund).

  • James, Harold, 1996, International Monetary Cooperation Since Bretton Woods (New York, International Monetary Fund and Oxford University Press).

    Google Scholar 

  • Kenen, Peter B., 1985, “Macroeconomic Theory and Policy: How the Closed Economy was Opened,” in Handbook of International Economics, Vol. 2, International Monetary Economics and Finance, ed. by Ronald W. Jones and Peter B. Kenen (Amsterdam, North-Holland), pp. 625–677.

    Google Scholar 

  • Khan, Mohsin S., Peter Montiel, and Nadeem Ul Haque, 1990, “Adjustment with Growth: Relating the Analytical Approaches of the IMF and the World Bank,” Journal of Development Economics, Vol. 32, pp. 155–179.

    Article  Google Scholar 

  • Lane, Timothy, Atish Ghosh, Javier Hamann, Steven Phillips, Marianne Schulze-Ghattas, and Tsidi Tsikata, 1999, IMF-Supported Programs in Indonesia, Korea, and Thailand, Occasional Paper No. 178 (Washington, International Monetary Fund).

  • Meade, James E., 1951, The Theory of International Economic Policy: Volume One. The Balance of Payments (London, Oxford University Press).

    Google Scholar 

  • Mohammed, Azizali, 1965, “A Comparison of Various Collective Reserve Unit Proposals,” Staff Memorandum SM/65/97 (December 2).

  • Mundell, Robert, 1991, “The Quantity Theory of Money in an Open Economy: Variations on the Hume-Polak Model,” in International Financial Policy: Essays in Honor of Jacques J. Polak, ed. by Jacob A. Frenkel and Morris Goldstein (Washington, International Monetary Fund, in association with De Nederlandsche Bank), pp. 479–508.

    Google Scholar 

  • Mussa, Michael, James M. Boughton, and Peter Isard, 1996, The Future of the SDR in Light of Changes in the International Financial System (Washington, International Monetary Fund).

    Google Scholar 

  • Polak, Jacques J., 1939, “The International Propagation of Business Cycles,” Review of Economic Studies, Vol. 6 (February), pp. 79–99.

    Article  Google Scholar 

  • Polak, Jacques J., 1941, “Rationing of Purchasing Power to Restrict Consumption,” Economica, Vol. 8 (August), pp. 223–238.

    Article  Google Scholar 

  • Polak, Jacques J., 1943, “Balance of Payments Problems of Countries Reconstructing with the Help of Foreign Loans,” Quarterly Journal of Economics, Vol. 57 (February), pp. 208–240.

    Article  Google Scholar 

  • Polak, Jacques J., 1947, “Exchange Depreciation and International Monetary Stability,” Review of Economic Statistics, Vol. 29 (August), pp. 173–182.

    Article  Google Scholar 

  • Polak, Jacques J., 1955, “The Economics of Scrabble,” American Economic Review, Vol. 45, No. 4, pp. 648–652.

    Google Scholar 

  • Polak, Jacques J., 1956, “Monetary Analysis of Income Formation and Payments Problems,” IMF Departmental Memorandum DM/56/34 (November 28).

  • Polak, Jacques J., 1957, “Monetary Analysis of Income Formation and Payments Problems,” IMF Staff Papers, Vol. 6 (November), pp. 1–50.

    Article  Google Scholar 

  • Polak, Jacques J., 1962, “International Coordination of Economic Policy,” IMF Staff Papers, Vol. 9 (July), pp. 149–179.

    Article  Google Scholar 

  • Polak, Jacques J., 1963, “An Alternative View of the Financial Assets of the Fund,” (August 30), unpublished paper. IMF Archives, Bureau of Statistics, BURAI subject files, Box 37, file 2.

  • Polak, Jacques J., 1964, “Observations on the Creation of Unconditional Liquidity in the Fund,” attachment (dated April 21, 1964) to memorandum from Polak to Mr. Altman and others (April 23). IMF Archives, Bureau of Statistics, BURAI subject files, Box 37, file 2.

  • Polak, Jacques J., 1965, “The Report of the International Monetary Fund,” American Economic Review: Papers and Proceedings, Vol. 55, No. 2, pp. 158–165.

    Google Scholar 

  • Polak, Jacques J., 1979, Collected Papers, Vol. 1 and 2. Compiled by Lillian H. Cooley and privately printed by the International Monetary Fund. (Copies are held at the IMF-World Bank joint library and at De Nederlandsche Bank in Amsterdam)

  • Polak, Jacques J., 1988, “The Choice of Exchange Rate Regime,” in Development Issues in the Current International Monetary System: Essays in Honour of Byanti Kharmawan, ed. by Dahlan M. Sutalaksana (Singapore, Addison Wesley), pp. 132–148.

    Google Scholar 

  • Polak, Jacques J., 1991, “International Policy Coordination and the Functioning of the International Monetary System: A Search for Realism,” in The Reality of International Economic Policy Coordination, ed. by Hans J. Blommestein (Amsterdam, North-Holland), pp. 151–171.

    Google Scholar 

  • Polak, Jacques J., 1994, Economic Theory and Financial Policy: The Selected Essays of Jacques J. Polak, Vols. 1 and 2. Economists of the Twentieth Century. (Aldershot, England, Edward Elgar).

    Google Scholar 

  • Polak, Jacques J., 1995, “Fifty Years of Exchange Rate Research and Policy at the International Monetary Fund,” IMF Staff Papers, Vol. 42 (December), pp. 734–761.

    Article  Google Scholar 

  • Polak, Jacques J., 1996, “Should the SDR Become the Sole Financing Technique for the IMF?” in The Future of the SDR in Light of Changes in the International Financial System, ed. by Mussa Michael, James M. Boughton, and Peter Isard (Washington, International Monetary Fund), pp. 221–239.

    Google Scholar 

  • Polak, Jacques J., 1999, “Streamlining the Financial Structure of the International Monetary Fund,” Princeton Essays in International Finance, No. 216 (September).

  • Polak, Jacques J., 2002, “The Two Monetary Approaches to the Balance of Payments: Keynesian and Johnsonian,” in The Open Economy Macromodel: Past, Present and Future, ed. by Aire Arnon and Warren Young (Dordrecht, Kluwer Academic Publishers), pp 19–41.

    Chapter  Google Scholar 

  • Polak, Jacques J., and Lorette Boissonneault, 1960, “Monetary Analysis of Income and Imports and Its Statistical Application,” IMF Staff Papers, Vol. 7 (April), pp. 349–415.

    Article  Google Scholar 

  • Polak, Jacques J., and Rudolf Rhomberg, 1962, “Economic Instability in an International Setting,” American Economic Review, Papers and Proceedings, Vol. 52 (May), pp. 110–118.

    Google Scholar 

  • Polak, Jacques J., and Ta-Chung Liu, 1954, “Stability of the Exchange Rate Mechanism in a Multi-Country System,” Econometrica, Vol. 22 (July), pp. 360–389.

    Article  Google Scholar 

  • Prais, Sigbert Jon, 1961, “Some Mathematical Notes on the Quantity Theory of Money in an Open Economy,” IMF Staff Papers, Vol. 8 (May), pp. 212–226.

    Article  Google Scholar 

  • Solomon, Robert, 1977, The International Monetary System 1945–1976: An Insider's View (New York, Harper & Row).

    Google Scholar 

  • Solomon, Robert, 1996, “Creation and Evolution of the SDR,” in The Future of the SDR in Light of Changes in the International Financial System, ed. by Mussa Michael, James M. Boughton, and Peter Isard (Washington, International Monetary Fund), pp. 25–41.

    Google Scholar 

  • Triffin, Robert, 1959a, “The Return to Convertibility: 1926–1931 and 1958–? or, Convertibility and the Morning After,” Banca Nazionale del Lavoro Quarterly Review, Vol. 48 (March), pp. 3–57.

    Google Scholar 

  • Triffin, Robert, 1959b, “Tomorrow's Convertibility: Aims and Means of National Monetary Policy,” Banca Nazionale del Lavoro Quarterly Review, Vol. 48 (June), pp. 131–200.

    Google Scholar 

Download references

Authors

Additional information

*James M. Boughton, formerly Professor of Economics at Indiana University, is the IMF Historian.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Boughton, J. Jacques J. Polak and the Evolution of the International Monetary System. IMF Econ Rev 59, 379–399 (2011). https://doi.org/10.1057/imfer.2011.3

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/imfer.2011.3

JEL Classifications

Navigation