Académique Documents
Professionnel Documents
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Global
b l Economy
E
Balance of Payments
y Current Account
y Measures the flow of g
goods,, services,, income,, and
transfers or gifts between domestic residents,
businesses, and governments and the rest of the
world.
y Goods: imports and exports of tangible goods.
y Services: imports and exports of services, tourism
and travel,
travel and military transactions
transactions.
y Income: interest and dividend payments to foreign
holders of domestic financial assets.
y Unilateral
U il t l transfers:
t f international
i t ti l transfers,
t f or
gifts, between individuals and governments.
y Statistical Discrepancy
y An offsetting entry in the balance of payments if
the sum of the credits and debits in the current
account, private capital account, and official
settlements is not zero.
y Overall Balance of Payments
y The sum of the credits and debits in the current
account, capital account, official settlements, and
the statistical discrepancy.
y Balance-of-Payments Deficit
y The sum of the credits and debits in the current
account and the private capital account is
negative.
negative
y Balance-of-Payments Surplus
y A situation where the sum of the debits and
credits in the current and private capital account
is positive.
y Balance
Balance-of-Payments
of Payments Equilibrium
y A situation where the sum of the debits and
credits in the current account and the private
capital account is zero.
zero
9 Professor Augustine H H Tan MBA Global Economy Session 5-09
Other Deficit and Surplus Measures
C rr t accountt
Current
y Goods and services balance
y Merchandise trade balance
y Services balance
y Investment income (net)
y Unilateral transfers
y Private transfer payments
y Governmental transfers
C it l andd financial
Capital fi i l accountt
y All purchases or sales of assets, including:
y Direct investment
y Securities (debt)
y Bank claims and liabilities
y Official settlements transactions
C rr t accountt surplus
Current r l andd deficit
d fi it
y Current account and capital & financial account
balance each other; when one is in surplus the
other must be in deficit
y Current account surplus means exports of goods
and
d services,
i investment
i t t income
i and
d transfers
t f
exceed imports and outflows: net lending abroad
(capital outflow)
y Current account deficit means imports of goods
and services, and outflows are greater than
exports
p and inflows;; must be financed byy
borrowing (capital account inflows)
CA = Y - [C + I + G]
S=Y-C-G
S = Y - C - G = [Y - T - C] + [T - G]
S = PS + GS PS=Private Saving
GS=Government Saving
S = I + CA = PS + GS
CA = PS - I + T - G
CA = [PS - I] + [T - G]
US Balance
B l off P
Payments 1970
1970-2001
2001
T d balances
Trade b l & growth,
h 1992-7
SINGAPORE 1993
CA = $8,358 million
I [[Gross Capital
p Formation]] = $35,441
, million
Balance
l off internationall indebtedness
db d
y Summarizes one nation’s overall quantity of
assets
t andd liabilities
li biliti against
i t the
th restt off the
th world
ld
y Shows whether the nation is a net debtor or a net
creditor
y Indicates sensitive items, such as short term debt
held by foreigners which could be liquidated
quickly, straining finances
f