Questions tagged [balance-of-payments]

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How to apply the debtor creditor principle

There are two types of presentations for the FDI. One based on Assets and Liabilities and the other on directional basis. Assets and Liabilites presentation is used in the Balance of Payments and the ...
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Determining the FDI stock after valuation adjustements

Let $FDIS_t$ denote the FDI stock at the end of the year $t$ and $FL$ denote the FDI flow during the period from the end of year $t$ to the end of the year $t+1$. I want to determine $FDIS_{t+1}$ the ...
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The gold standard and trade imbalances

I’ve recently come across a paper which states that trade imbalances during the gold standard caused outflows/inflows of gold from the country running the trade surplus/deficit thus securing balanced ...
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Which capital account entries do Remittances correspond to in the Balance of Payments?

I understand that remittances make up a large portion of some emerging economies, which would contribute to the current account (CA) of those economies. To satisfy the accounting balance CA+KA+FA=0, ...
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How to record the value of goods that are given away in balance of payments

In the current account of the balance of payments, imports and exports include goods that are given away. Since a good that is given away involves a transaction with 0 monetary value, how is this ...
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Balance of payment and cash

Can you explain in simple terms how FX cash withdrawals are recorded in the BoP and in particular the impact on Errors and Omissions? From below report it seems when people get USD cash at ATM this ...
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What is a clear example of above-the-line (autonomous) transaction and a below-the-line (accomodating) transaction?

The only thing I could find are vague circular definitions stating that the former leads to a surplus in BoP, when positive---and a deficit, when negative. I understand the BoP always balances, but ...
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Where do loans paid by a country to another exist? Is it in the secondary income or primary income of balance of payment?

I know the balance of payment of a country is a financial record of a country's transactions with the rest of the world. Its main component is the current account. The current account contains the ...
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Is the EU COVID stimulus plan recorded in BOP accounts?

I was wondering if the EU COVID stimulus plan will be recorded (or has already been recorded) in the BOP of the recipient countries. My intuition is that loans would be recorded in the capital account(...
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How can a country have both of its current account and financial account negative?

I was doing a research on France history record of its balance of payments. I found france was having current account deficit through out the past 13 years (since 2007). At the same time period, ...
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If the BOP is always equal to 0 then why would a trade imbalance cause currencies to fluctuate?

I am a bit confused in interpreting the correlation between a trade deficit/surplus & currency depreciation/appreciation. Considering BOP always equals 0 and a outflow in the current account is ...
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Are there any benefits of moderate devaluation of a currency?

The value of Indian rupee has decreased over the years. The government apparently makes no effort to stop or reverse it. Instead they focus on other aspects of development. Observation 1- I see that ...
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Does a high current account deficit ALWAYS have to increase net foreign debt/equity?

My book states a higher CAD necessarily increases net foreign debt/net foreign equity, and I'm a bit confused by this assertion. See, I can understand how a higher current account deficit may ...
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Can anyone explain why the Swiss balance of payments is not balanced (real data)?

While doing a little research I went to the Swiss National Bank's website and downloaded their data on the Swiss balance of payments. The data is here: https://data.snb.ch/en/topics/aube#!/cube/...
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Does a high current account deficit devalue the national currency?

I've been reading some materials about Belarus's 2011 financial crisis, and a common thread among them is this: Belarus had had a rapidly growing current account deficit, and in 2011 it came to a head ...
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Where in the BOP does the rental of a building appear?

Say a Japanese citizen (living and working in Japan) owns a house in the US and rents it out (to a US resident) for \$10,000 in 2020. (Assume the value of the land is negligible.) Where in the US BOP ...
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Balance of Payment (BPM6) - Direct Investment: how to record

I have a question related to recording in BOP Let say we have two countries: DOMES (domestic country) EXT (external country) a company in EXT invest a new factory in DOMES. I don't know how this ...
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What are some reasons why CEOs make 200-1000x as much as post PhD researchers?

Even the most monetarily effective Post PhD Researchers make at most a couple of million dollars over the course of their careers, whereas CEOs can earn over 1000x more over the course of theirs even ...
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Unilateral transfers in the balance of payments

In the secondary income account, unilateral transfers like unconditional foreign aid are recorded but aren't every transaction double-entry to make the balance of payments equal 0. What is the other ...
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Gap between BOP and macroeconomic terminologies (In my opinion)

I have not studied BOP well, but as far as i can understand, there is a mismatch between BOP and macroeconomics terminologies. In BOP we say that capital outflow (inflow) occures when finacial account ...
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China's balance of payment and balance of trade - relation to inflation

I am struggling with understanding how China's balance of payments (negative, deficit) and balance of trade (positive, profit around 0.5 trln USD) affect it's inflation rate. Obviously, balance of ...
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on the FRED website where do i find definitions of the variables they give charts of?

eg M3? how can we see precisely how it is defined, measured? https://fred.stlouisfed.org/series/MABMM301USM189S?fbclid=IwAR1lwaCbKUX16L1meOk6iZvloYOW0F7pIjmq9I4sb5VfvhhLhj8lsVTlpxg
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How are trade deficits financed?

The usual answer is either "foreign debt" or "Foreign Direct Investment". But: Why does that make sense? And why wouldn't be financed otherwise like from importers taking out bank loans domestically ...
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Sources of data for GDP and BoP accounts

When an American buys a coffee within the US, how does that 3.50 dollars worth of consumption expenditure make it's way to the US GDP account? Is the information obtained from the company's tax ...
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Why a Current Account deficit implies a Financial Account surplus [duplicate]

Every macro textbook out there states that if a country has a Current Account deficit, it must have a surplus in the Financial account, but I have not heard a convincing explanation. Imagine a ...
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Interpretation of IMF Balance of Payments Data - Financial Account

While I understand the meaning of the components of the Financial account what I don't understand is the concept of "assets" and "liabilities" after direct investment, portfolio investment etc. A ...
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What happens if the Central Bank does not absorb a BOP deficit/surplus?

The basic principle of BOP accounting is double entry bookkeeping. In short, every transaction enters twice. As a consequence of this, by definition $$\text{Current account } (CA) + \text{Capital ...
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why is it always said that a CAD must be financed by borrowing from foreign countries

a current account deficit (CAD) means you have money leaking out of your country and going to ROW (rest of world). i see here (https://www.imf.org/external/region/tlm/rr/pdf/fpp5.pdf) that it can be '...
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Where's a good place to find Information on Non-OCED countries?

I'm looking for Private Savings (Sp), Investment (I), Taxes (T), Government Spending (G) for India.
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Balance of payments and the free floating exchange rate system

I am a beginner economics student and recently, I have been learning about how balance of payments surpluses are important for a country to control the value of its currency using its accumulated ...
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Devaluation of exchange rate meaning

Pilbeam's textbook on International Finance (p. 106) says: (...) the immediate effect of a devaluation of exchange rate from $S_1$ to $S_2$ is to make domestic good competitive (...) How can be ...
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Why FDI stock in the same year is different in the same reports?

From World Investment Report 2003, in 2000, the US has 12.4% GDP as FDI inward stock and 13.2% GDP as FDI outward stock. These numbers are equivalent to 1274720 million USD, and 1356960 million USD. ...
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Terms definition in Balance of Payment

I have problems in distinguishing among terms in the Balance of Payment / the international balance sheet of a nation. As far as I know, on Assets and Liabilities sides of BPM, there are Portfolio ...
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Is there a quantitative model demonstrating the relationship between balance of payments and exchange rate?

According to conventional analysis, a key factor in exchange rate determination is the state of the balance of payments. An increase in imports gives rise to an increase in a demand for foreign ...
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Difference between capital and current account

Why is an increase in foreign assets in a country different from us just selling foreigners our goods? As in why is one (inc. in assets) in capital account and the other (exports) in current account?
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How does Russia have so much foreign exchange reserves?

Source Russia is under U.S. sanctions. How does Russia have so much foreign exchange reserves?
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Have UK exports (goods and services) to Ireland declined in value since 2011?

Where can I find the relevant Office Of National Statistics data on UK exports to Ireland? I want to know if the value of UK exports to Ireland has declined since 2011 and if so, does anyone know why ...
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How to interpret illigal foreign currency (cash) transfers in terms of Balance of payments

There are a lot of examples of legal operations with trade balance and capital flows. Nonetheless, I've failed to find a clear explanations of how to interpret illigal (read, criminal) foreign ...
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Balance of Trade - Currency devaluation in a price taker economy

How will a real exchange rate devaluation affect Balance of Trade, if an economy is a price taker in world markets for both export and import?
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help understanding the "financing" of the current account

I often hear phrases like country XYZ "finances its current account deficit through flows in its financial account". i have a tough time understanding this idea of "financing" a current account ...
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How do currency traders resolve imbalances in the demand for different currencies?

Countries trade different amounts of goods that are inherently imbalanced. How do currency traders resolve these imbalances in the demand for different currencies? For example.... Imagine we have two ...
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What's the role for official intervention in the Balance of Payments?

If the Balance of Payments (BP) is defined as $$BP=\text{Current Account}+\text{Capital Account}$$ where: $$\text{Current Account}=X-M+\text{Net Income Interest}$$ and $$\text{Capital Account}=\...
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