港大英文课件bop.pptVIP

Balance of Payments WONG Ka Fu 19th January 2000 International Transactions Goods services Payment A B Saving and Investment in the Open Economy A countrys spending need not equal its production in every period due to foreign trade The fundamental determinants of a countrys trade position are its saving and investment decisions Home economy = domestic economy Balance of Payments (BOP) Accounts The record of a countrys international transactions Any transaction that involves a flow of money into home economy is a credit (+) item (enters with a plus sign); for example, exports Any transaction that involves a flow of money out of home economy is a debit (-) item (enters with a minus sign); for example, imports The Current Account (CA) = Net exports of goods and services + Net investment income from assets abroad + Net unilateral transfers The Capital Account (KA) The capital account records trades in existing assets, either real (for example, houses) or financial (for example, stocks and bonds) When home country sells assets to foreign country, that is a capital inflow for the home country and a credit (+) item in the capital account The Official Settlements Balance A component of capital account Transactions in official reserve assets are conducted by central banks around the world Official reserve assets are assets (foreign government securities, bank deposits, and special drawing rights of the IMF, gold) used in making international payments Central banks buy (or sell) official reserve assets with (or to obtain) their own currencies The Official Settlements Balance Balance of official reserve transactions = The net increase in foreign official reserve claims on home country minus the net increase in home country’s official reserves. Thus, a sale (reduction) of official reserve asset enters positively into the balance of official reserve transactions. (as for all KA transactions, a sale is a credit term) The Official Settlements Balance = current account bal