国际金融02德州大学教授.ppt

InternationalFinanceFINA5331Lecture7:BalanceofPaymentsWilliamJ.CrowderPh.D.,BalanceofPaymentsAccounting,TheBalanceofPaymentsisthestatisticalrecordofacountrysinternationaltransactionsoveracertainperiodoftimepresentedintheformofdouble-entrybookkeeping.N.B.whenwesay“acountrysbalanceofpayments”wearereferringtothetransactionsofitscitizensandgovernment.,BalanceofPaymentsExample,SupposethatMaplewoodBicycleinMaplewood,Missouri,USAimports$100,000worthofbicycleframesfromMercianBicyclesinDarbyEngland.Therewillexista$100,000creditrecordedbyMercianthatoffsetsa$100,000debitatMaplewoodsbankaccount.ThiswillleadtoariseinthesupplyofdollarsandthedemandforBritishpounds.,Thebalanceofpaymentsaccountsarethosethatrecordalltransactionsbetweentheresidentsofacountryandresidentsofallforeignnations.Theyarecomposedofthefollowing:TheCurrentAccountTheCapitalAccountTheOfficialReservesAccountStatisticalDiscrepancy,BalanceofPaymentsAccounts,TheCurrentAccount,Includesallimportsandexportsofgoodsandservices(invisibletrade).Includesunilateraltransfersofforeignaid.Ifthedebitsexceedthecredits,thenacountryisrunningatradedeficit.Ifthecreditsexceedthedebits,thenacountryisrunningatradesurplus.ItisthoughtthattheCArespondstochangesinincomeandtheexchangerate.,TheCurrentAccount,Acreditonthecurrentaccountresultsinforeignreservesflowingin(fixedexchangerate)oranincreaseinthedemandfordomesticcurrencyintheFOREXmarket(flexibleexchangerate).Adebitonthecurrentaccountresultsinforeignreservesflowingoutofthedomesticeconomy(fixedexchangerate)oranincreaseinthesupplyofdomesticcurrencyintheFOREXmarket(flexibleexchangerate).,TheCurrentAccount,Whenadomesticcompanysellsgoodsorservicestoaforeignresident,therewillbeacreditrecordedonthecurrentaccount.Whenadomesticresidentbuysgoodsorservicesfromaforeignfirm,therewillbeadebitrecordedonthecurrentaccount.Whenaforeignassetpaysinteresttoadomesticresident,oradomesticresidentearnsincomeintheforeigneconomy,therewillbeacreditrecordedonthecurrentaccount.Whenadomesticassetpaysinteresttoaforeignresident,oraforeignresidentearnsincomeinthedomesticeconomy,therewillbeadebitrecordedonthecurrentaccount.,WhataffectstheCA?,CAdeficit,0,CA(S0),CAsurplus,DomesticIncome(Y),Y0,Giventheexchangerate,S0,thereexistssomedomesticincomelevel,Y0,wherethecurrentaccountisbalanced.,WhataffectstheCA?,CAdeficit,0,CA(S0),CAsurplus,DomesticIncome(Y),Y0,Y1,Anincreaseinincome,Y,willcauseimportstorisewithnochangeinexportsleadingtoadeteriorationinthecurrentaccount.,WhataffectstheCA?,CA(S1),CAdeficit,0,CA(S0),CAsurplus,DomesticIncome(Y),Y0,Y1,Sdomesticdepreciationcausingimportstofallandexportstorise,bothofwhichleadtoanimprovementinthecurrentaccount.,J-curveEffect,WhatconditionsarenecessaryforJ-curveeffect?,IMistheimportdemandelasticity=%importsdividedby%St.WhenIMisgreaterthanone(inabsolutevalue),adomesticdepreciationwillleadtoafallinthedollarvalueofimports.Importdemandissaidtobeelastic.WhenIMisequaltoone(inabsolutevalue),adomesticdepreciationwillnotchangethedollarvalueofimports.WhenIMislessthanone(inabsolutevalue),adomesticdepreciationwillleadtoariseinthedollarvalueofimports.Importdemandisinelastic.TheJ-curvecanonlyoccurwhenimportdemandelasticitiesareinelastic.,AlgebraofImportDemandElasticities,Willadepreciationincreaseyourcompanysexports?,Thatdependsontheelasticityofdemandforyourproduct.Adomesticdepreciationwillmakeyourproductslessexpensivetoforeignresidents.Thelawofdemandtellsusthatquantitydemandedwillbehigher.Butifthepricefallsbymorethanthequantityrises(inelasticdemand),totalsaleswillbeless.Aninelasticexportdemandwillleadtolowersales.Yourcompanywouldbebetteroffwithadomesticappreciation!TodeterminetheeffectoncompanyexportsalesofachangeinSt,oneneedstoknowtheforeigndemandelasticity.,TheCapitalAccount,ThecapitalaccountmeasuresthedifferencebetweenU.S.salesofassetstoforeignersandU.S.purchasesofforeignassets.TheU.S.enjoysabouta$444,000,000,000capitalaccountsurplusabsentofU.S.borrowingfromforeigners,this“finances”ourtradedeficit.ThecapitalaccountiscomposedofForeignDirectInvestment(FDI),portfolioinvestmentsandotherinvestments.,WhataffectstheKA?,KAdeficit,r-r*,KAsurplus,KA,WhataffectstheKA?,KAdeficit,r-r*,KAsurplus,KA,Ifrr*thencapitalwillflowintothedomesticeconomyandcreateacapitalaccountsurplus.,WhataffectstheKA?,KAdeficit,r-r*,KAsurplus,KA,Ifrr*thencapitalwillflowoutofthedomesticeconomyandcreateacapitalaccountdeficit.,WhataffectstheKA?,KAdeficit,r-r*,KAsurplus,KA,Ifr=r*thencapitalwillnothaveanyincentivetomoveandthecapitalaccountwillbeinbalance.,TheCapitalAccount,Acreditonthecapitalaccountresultsinforeignreservesflowingin(fixedexchangerate)oranincreaseinthedemandfordomesticcurrencyintheFOREXmarket(flexibleexchangerate).Adebitonthecapitalaccountresultsinforeignreservesflowingoutofthedomesticeconomy(fixedexchangerate)oranincreaseinthesupplyofdomesticcurrencyintheFOREXmarket(flexibleexchangerate).,TheCapitalAccount,Whenadomesticentity(firmorindividual)sellsanassettoaforeignresident,therewillbeacreditrecordedonthecapitalaccount.Whenadomesticresidentbuysanassetfromaforeignentity,therewillbeadebitrecordedonthecapitalaccount.Noteincomeearnedontheseassetsisrecordedonthecurrentaccount,notthecapitalaccount.,StatisticalDiscrepancy,Theresgoingtobesomeomissionsandmisrecordedtransactionssoweusea“plug”figuretogetthingstobalance.Exhibit3.1showsadiscrepancyof$0.73billionin2000.,TheOfficialReservesAccount,Officialreservesassetsincludegold,foreigncurrencies,SDRs,reservepositionsintheIMF.,TheBalanceofPaymentsIdentity,BCA+BKA+BRA=0whereBCA=balanceoncurrentaccountBKA=balanceoncapitalaccountBRA=balanceonthereservesaccountUnderapureflexibleexchangerateregime,BCA+BKA=0BecauseBRA=0,U.S.BalanceofPaymentsData,U.S.BalanceofPaymentsData,In2000,theU.S.importedmorethanitexported,thusrunningacurrentaccountdeficitof$444.69billion.,U.S.BalanceofPaymentsData,Duringthesameyear,theU.S.attractednetinvestmentof$444.26billionclearlytherestoftheworldfoundtheU.S.tobeagoodplacetoinvest.,U.S.BalanceofPaymentsData,Underapureflexibleexchangerateregime,thesenumberswouldbalanceeachotherout.,U.S.BalanceofPaymentsData,Intherealworld,thereisastatisticaldiscrepancy.,U.S.BalanceofPaymentsData,Includingthat,thebalanceofpaymentsidentityshouldhold:BCA+BKA=BRA,($444.69)+$444.26+$0.73=$0.30=($0.30),BalanceofPaymentsandtheExchangeRate,Q,P,Exchangerate$,S,D,Q,P,AsU.S.citizensimport,theysupplydollarstotheFOREXmarket.,Exchangerate$,S,D,BalanceofPaymentsandtheExchangeRate,Q,P,AsU.S.citizensexport,othersdemanddollarsintheFOREXmarket.,Exchangerate$,S,D,BalanceofPaymentsandtheExchangeRate,Q,P,S,D,AstheU.S.governmentsellsdollars,thesupplyofdollarsincreases.,S1,Exchangerate$,BalanceofPaymentsandtheExc