Lecture 9 Don DeVoretz

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Lecture 9Don DeVoretz

• Balance of Payments, Current Account
• and Capital Account

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Current Account

• 1. Exports of goods and Services A
  
• 2. Imports of G and S B
  
• 3. Investment Income C
  
• 4. Debt Service D
  
• 5. Remittances E
  
• Current Account (A-BC-DE) lt or gt than 0

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Capital Account

• 6. Direct Private Investment G
  
• 7. Foreign Loans H
  
• 8. Foreign Assets Domestic Banks I
  
• 9. Capital Outflow K
  
• Capital Account (GH-I-K)
  

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Equilibrium Balance of Payments

• /- Cash Reserves
• Current Plus
• Capital Account
• What if no CASH Reserves in hard currency ?
• BORROW

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From Whom ?

• Private Banks BNS
• Bilateral Govt Loans
• Japan,USA and EU
• Multilateral
• Inter-American Bank
• IMF

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