ABSTRACT
The idea that the burden of balance-of-payments adjustment falls more heavily on deficit than on surplus countries is commonly found in economic literature. Those who condemn this sharing of the burden of adjustment as inequitable usually see as its source the limited supply of international liquidity. Under a system of fixed exchange rates, disequilibrium results in a shift of international liquidity from deficit to surplus countries; the former would then be compelled to re-establish equilibrium under the menace of a run on reserves while the latter could ignore their reserve surplus since they are not subjected to such a menace.
