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5 votes

Are there any benefits of moderate devaluation of a currency?

Currency depreciation (devaluation is for fixed exchange rate) has many good side effects. Most important positive effect is that it helps domestic exporters because it makes Indian goods cheaper ...
csilvia's user avatar
  • 2,734
4 votes

Surplus in the Financial Account - BoP

Under fixed exchange rate the balance will be restored by shifts to the IS curve. BoP equals to current account $T$ which depends on real exchange rate $q$ and output $Y$ and capital and financial ...
Lorenzo Pozzi's user avatar
3 votes
Accepted

What does Milton Friedman mean by - "if they sell things to us in dollars then they are going to spend those dollars back here" (link below)

Note carefully what Friedman says: "If the (foreign) companies want to sell goods to Americans in dollars, they will have to spend those dollars in America" Company can only sell dollars ...
1muflon1's user avatar
  • 57k
3 votes

If the BOP is always equal to 0 then why would a trade imbalance cause currencies to fluctuate?

Ignoring net errors and omissions and the official reserve account, it is indeed just the current account and capital account and the BoP always balances. However, under floating FX rates, the ...
AKdemy's user avatar
  • 4,122
3 votes
Accepted

on the FRED website where do i find definitions of the variables they give charts of?

The bottom of these indicator/series pages on FRED always lists the source. In this case, it's the OECD. If you dig around a bit on their site, and find where they host the data, there is always some ...
anguyen1210's user avatar
3 votes

How are trade deficits financed?

This can be visualized nicely by an example: Let’s say there are two islands in the world. And let’s just say island A only produces apples and island B only produces bananas. Also, the (real) ...
Chris tie's user avatar
  • 870
2 votes

Difference between capital and current account

You can think of the capital account as "exports of liabilities" - a capital account surplus means that a country is exporting liabilities (borrowing) from abroad to pay for imports of goods and ...
Ege Erdil's user avatar
  • 691
2 votes

why is it always said that a CAD must be financed by borrowing from foreign countries

A current account deficit is when a country imports more goods, services, and capital than it exports. The current account measures trade plus transfers of capital. https://www.thebalance.com/...
Acccumulation's user avatar
2 votes

Are there any benefits of moderate devaluation of a currency?

Economic theory say that the devaluation of a currency can help as long as the country does not import more than it exports and mainly does not import a lot of raw materials or intermediates to be ...
Pegasus's user avatar
  • 137
2 votes
Accepted

What are some reasons why CEOs make 200-1000x as much as post PhD researchers?

Your question contains several false claims. I will give you benefit of doubt and assume those falsehoods are not intentional and just reflect lack of statistical literacy and misunderstanding/...
1muflon1's user avatar
  • 57k
1 vote

BOP balancing to 0, use of capital and financial account

I think your main issue is a confusion of the term capital. It seems that your sources sometimes refer to 'money transferred' as 'capital transferred', and 'stuff transferred' as e.g. 'goods ...
E. Sommer's user avatar
  • 1,325
1 vote

Does a high current account deficit ALWAYS have to increase net foreign debt/equity?

The balance of payments identity states that the current account and financial account sum to zero: if you have a current account deficit, you have a financial account surplus. This identity comes ...
j steinberg's user avatar
1 vote

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? It would be personal consumption expenditures which ...
Mike J's user avatar
  • 1,467
1 vote

What happens if the Central Bank does not absorb a BOP deficit/surplus?

If OA is a part of FA. The second equation follows from the first: $CA + KA = FA \wedge OA \neq 0 \Rightarrow FA - OA = CA +KA -OA \neq CA +KA$. Response to your EDIT: $CA + KA \neq \frac{FA}{OA}$ ...
Grada Gukovic's user avatar
1 vote

Where's a good place to find Information on Non-OCED countries?

The IMF Data, the UN Country Data or the World Bank Open Data should be good data sources covering a wide range of countries.
JoaoBotelho's user avatar
  • 2,155
1 vote

Balance of payments and the free floating exchange rate system

The Balance of Payments are a form of double-entry bookkeeping and so in theory should always balance overall If official reserves do not change because the currency is floating freely and the ...
Henry's user avatar
  • 4,765
1 vote
Accepted

Why FDI stock in the same year is different in the same reports?

In note 1 of the World Investment Report 2017 (page 39), it is mentioned that FDI data may differ from one WIR issue to another as data are continually revised, updated and corrected by the ...
emeryville's user avatar
  • 6,975
1 vote
Accepted

Terms definition in Balance of Payment

Your statement "Portfolio Equity is about stocks/shares, whereas Portfolio Debt is about bonds" is essentially correct, with the associated income being dividends and coupons respectively Direct ...
Henry's user avatar
  • 4,765
1 vote

How does Russia have so much foreign exchange reserves?

Russia has been ramping up its production of oil since late 1990s after it defaulted on its debt. It has been maintaining positive trade balance since then. Also, notice in the above graph, Russia ...
london's user avatar
  • 2,010
1 vote

How does Russia have so much foreign exchange reserves?

russia uses its oil revenue to setup russia stabilization fund in 2004. The money in that fund is used to pay for national budget deficit. The foreign exchange reserve of Bank of Russia is not ...
styling's user avatar
  • 11
1 vote

Have UK exports (goods and services) to Ireland declined in value since 2011?

The ONS Balance of Payments Pink Book gives the following figures for UK exports to Ireland (£million). The figures in Euros would be different, as would Irish reporting of the numbers, but there ...
Henry's user avatar
  • 4,765
1 vote

How to interpret illigal foreign currency (cash) transfers in terms of Balance of payments

This answer starta out with how illegal transactions are normally treated in the national accounts. Transactions that are just attempts to evade currency controls are a special case, discussed later. ...
Brian Romanchuk's user avatar
1 vote

What's the role for official intervention in the Balance of Payments?

The Balance of Payments is supposed to be a form of double-entry bookkeeping, in that every transaction has two opposite effects, often in different accounts. Hence the word balance. In fact it might ...
Henry's user avatar
  • 4,765

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