a.) consists of current account and longterm capital flows.
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BALANCE-OF-PAYMENT CATEGORIES
1.) Basic Balance (con’t) b.) emphasizes longterm trends.
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Multinational Financial Management
Alan Shapiro
7th Edition J.Wiley & Sons
Power Points by Joseph F. Greco, Ph.D. California State University, Fullerton
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BALANCE-OF-PAYMENT CATEGORIES
5. Capital Account (con’t) d. Transactions classified as 1.) portfolio 2.) direct 3.) short term
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BALANCE-OБайду номын сангаас-PAYMENT CATEGORIES
III. COPING WITH CURRENT ACCOUNT DEFICITS
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PART I. BALANCE-OF-PAYMENT
CATEGORIES
A. THE BALANCE OF PAYMENTS (B-O-P) 1. PURPOSE: Measures all financial and economic transactions over a specified period of time.
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BALANCE-OF-PAYMENT CATEGORIES
3.) Official Reserve Transactions Balance - measures adjustments
needed by official reserves.
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PART II. THE INTERNATIONAL FLOW OF GOODS, SERVICES, AND CAPITAL
BALANCE-OF-PAYMENT CATEGORIES
1.) Basic Balance (con’t) c.) excludes short-term capital flows that heavily depend on temporary factors.
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BALANCE-OF-PAYMENT CATEGORIES
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BALANCE-OF-PAYMENT CATEGORIES
2. Double-entry bookkeeping a. Currency inflows = credits earn foreign exchange b. Currency outflows = debits expend foreign exchange
6. Official Reserves Account a. Function: 1.) measures changes in international reserves owned by central banks. 2.) reflects surplus/deficit of a.) current account b.) capital account
II. LINKS FROM INTERNATIONAL TO DOMESTIC FLOWS
A. Global Linkages set of basic macroeconomic identities which link: domestic spending and production to current and capital accounts
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BALANCE-OF-PAYMENT CATEGORIES
5. Capital Account a. Function: records public and private investment and lending. b. Inflows = credits c. Outflows = debits
7. Net Effects: a. Sum of all transactions must be zero:
1.) current account 2.) capital account 3.) official reserves
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BALANCE-OF-PAYMENT CATEGORIES
8. The Balance-of-payment measures a. Some Definitions: 1.) Basic Balance
2.) Net Liquidity Balance: measures the change in private domestic borrowing or lending require to keep payments equal without adjusting official reserves.
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BALANCE-OF-PAYMENT CATEGORIES
3. Three Major Accounts: a. Current b. Capital c. Official Reserves
4. Current Account records net flow of goods, services, and unilateral transfers.
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BALANCE-OF-PAYMENT CATEGORIES
6. Official Reserves Account (con’t) b. Reserves consist of 1.) gold 2.) convertible securities
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BALANCE-OF-PAYMENT CATEGORIES
CHAPTER 5
THE BALANCE OF PAYMENTS AND INTERNATIONAL LINKAGES
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CHAPTER OVERVIEW
I. BALANCE-OF-PAYMENT CATEGORIES
II. THE INTERNATIONAL FLOW OF GOODS, SERVICES,AND CAPITAL