The Balance of Payments

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The Balance of Payments
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Balance of Payments Accounting

• The Balance of Payments is the statistical record
  of a countrys international transactions over a
  certain period of time presented in the form of
  double-entry bookkeeping.

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Balance of Payments

• Current Account
• measure of the value of imports and exports of
  goods and services
• Capital Account
• measure of the value of international purchases
  and sales of assets
• money, stocks, bonds, land, factories

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Balance of Payments

• Credit
• any transaction resulting in a receipt to a
  domestic resident from a foreign resident
• Debit
• any transaction resulting in a payment to a
  foreign resident from a domestic resident

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Autonomous Financial Flows

• The Role of Multinational Enterprises

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The Balance of Payments Identity

• BCA BKA BRA 0
• Where
• BCA balance on current account
• BKA balance on capital account
• BRA balance on the reserves account
• Under a pure flexible exchange rate regime,
• BCA BKA 0