国际金融学课件：Chapter 2 Balance of Payments

1、The Balance of Payments2Chapter Objective:This chapter serves to introduce the students to the meaning, and measurement of the balance of payments. And defines the concepts of deficit and surplus in a nations balance of payments.Chapter 2Balance of Payments1.Introduction :Meaning2.Balance of Payment

2、s Accounting principles (1)Credits and Debits (2)Double-Entry Bookkeeping3. International Transactions4.Accounting Balances and Disequilibrium in International Transactions5.Balance of Payments Trends in Major Countries(1)MeaningThe Balance of Payments is the statistical record of a countrys interna

3、tional transactions over a certain period of time presented in the form of double-entry bookkeeping.A summary statement, a few major categories(1)MeaningN.B.International transactionResident (when we say “a countrys balance of payments” we are referring to the transactions of its citizens and govern

4、ment.)A certain or a particular period of time (1)MeaningFor example: in one year in the U.S. Following international transactionA U.S. firm exports $500 of goods to be paid for three months.A U.S. resident visits London and spent $200 on hotels, meals and so on.The U.S. government gives a U.S bank

5、balance of $100 to the government of a developing nation as part of the U.S. aid program.A U.S. resident purchases a foreign stock for $400 .A foreign investor purchases $300 of U.S. T-bills.(1)MeaningGoodsServicesUnilateral transfersCapital, netTotal Credit(+)Debit(-)$500$200 100 200$500$5002.Balan

6、ce of Payments Accounting Principles(1)Credits and Debits Credit: any transaction that results in receipt from foreigners , recorded with a positive sign “+”Debt: any transaction that give rise to a payment to foreigners , recorded with a negative sign “-”Capital inflows:an increase in foreign asset

7、s in the nation or a reduction in the nations assets abroad(2) Double-Entry BookkeepingExample1:Suppose that Boeing Corporation exported a Boeing 747 aircraft to Japan Airlines for $50million, and that Japan pays from its dollar bank account kept with Chase Manhattan Bank in New York City. Then the

8、receipt of $50 million by Boeing will be recorded as a credit(+), which will matched by a debit(-) of the same amount representing a reduction of the U.S. banks liabilities. (2) Double-Entry BookkeepingExample 2: Boeing imports jet engines produced by Rolls-Royce for $30million, that Boeing makes pa

9、yment by transferring the funds to a New York bank account kept by Rolls-Royce. Payment by Boeing will be recorded as a debit(-), whereas the deposit of the funds by Rolls-Royce will be recorded as a credit (+).(2) Double-Entry BookkeepingExample 3: Suppose that Ford acquires Jaguar, a British car m

10、anufacturer, for $750 million, and that Jaguar deposits the money in Barclays Bank in London, which ,in turn,uses the sum to purchase U.S treasury notes. In this case ,the payment of $750million by Ford will be recorded as debit(-), Barclays purchase of the U.S. Treasury notes recorded as a credit(+

11、) Transactions (million) Credit DebitBoeings export $50Withdrawal from -$50 U.S. bankBoeings import -$30Deposit at U.S.bank $30Fords acquisition of Jaguar -$750Barclays purchase $750 of U.S. securities3. International transactionsThe balance of payments accounts are those that record all transaction

12、s between the residents of a country and residents of all foreign nations.They are composed of the following:(1)The Current Account(2)The Capital Account(3)Statistical Discrepancy(4)The Official Reserves Account(1)The Current AccountIncludes all imports and exports of goods and services.Includes uni

13、lateral transfers of foreign aid.If the debits exceed the credits, then a country is running a trade deficit.(2)The Capital AccountThe capital account measures the difference between U.S. sales of assets to foreigners and U.S. purchases of foreign assets.The U.S. enjoys about a $382 billion capital

14、account surplusabsent of U.S. borrowing from foreigners, this “finances” our trade deficit.The capital account is composed of Foreign Direct Investment (FDI), portfolio investments and other investments.(3)Statistical DiscrepancyTheres going to be some omissions and misrecorded transactionsso we use

15、 a “plug” figure to get things to balance.Exhibit shows a discrepancy of $11 billion in 2001.(4)The Official Reserves AccountOfficial reserves assets include gold, foreign currencies, SDRs, reserve positions in the IMF.4.Accounting Balances and Disequilibrium in International TransactionsAutonomous

16、transactions: items above the line All transactions in the current and capital accountAccommodating transactions: items below the line the official reserve account4.Accounting Balances and Disequilibrium in International TransactionsIn BCA and BKA, If debit credit deficit If creditdebit surpluswhere

17、BCA = balance on current accountBKA = balance on capital accountBRA = balance on the reserves accountBCA + BKA + BRA = 0Under a pure flexible exchange rate regime, BCA + BKA = 0U.S. Balance of Payments Data2001(in billion) CreditsDebitsCurrent Account1Exports$1,2822Imports($1,626)3Transfers Unilater

18、al ($49)Balance on Current Account($393)Capital Account4Direct Investment$131($128)5Portfolio Investment$400($95)6Other Investments$218($143)Balance on Capital Account$382($11)7Statistical DiscrepanciesOverall Balance$0Official Reserve Account($0)U.S. Balance of Payments DataCreditsDebitsCurrent Acc

19、ount1Exports$1,167.612Imports($1,295.53)3Unilateral Transfers$6.13($45.01)Balance on Current Account($166.80)Capital Account4Direct Investment$107.93($119.44)5Portfolio Investment$387.62($79.28)6Other Investments$194.95($227.2)Balance on Capital Account$264.587Statistical Discrepancies($96.76)Overal

20、l Balance$1.02Official Reserve Account($1.02)In 1997, the U.S. imported more than it exported, thus running a current account deficit of $166.8 billion.U.S. Balance of Payments DataCreditsDebitsCurrent Account1Exports$1,167.612Imports($1,295.53)3Unilateral Transfers$6.13($45.01)Balance on Current Ac

21、count($166.80)Capital Account4Direct Investment$107.93($119.44)5Portfolio Investment$387.62($79.28)6Other Investments$194.95($227.2)Balance on Capital Account$264.587Statistical Discrepancies($96.76)Overall Balance$1.02Official Reserve Account($1.02)During the same year, the U.S. attracted net inves

22、tment of $264.58 billionclearly the rest of the world found the U.S. to be a good place to invest.CreditsDebitsCurrent Account1Exports$1,167.612Imports($1,295.53)3Unilateral Transfers$6.13($45.01)Balance on Current Account($166.80)Capital Account4Direct Investment$107.93($119.44)5Portfolio Investmen

23、t$387.62($79.28)6Other Investments$194.95($227.2)Balance on Capital Account$264.587Statistical Discrepancies($96.76)Overall Balance$1.02Official Reserve Account($1.02)Under a pure flexible exchange rate regime, these numbers would balance each other out.U.S. Balance of Payments DataCreditsDebitsCurr

24、ent Account1Exports$1,167.612Imports($1,295.53)3Unilateral Transfers$6.13($45.01)Balance on Current Account($166.80)Capital Account4Direct Investment$107.93($119.44)5Portfolio Investment$387.62($79.28)6Other Investments$194.95($227.2)Balance on Capital Account$264.587Statistical Discrepancies($96.76

25、)Overall Balance$1.02Official Reserve Account($1.02)In the real world, there is a statistical discrepancy. U.S. Balance of Payments DataU.S. Balance of Payments DataCreditsDebitsCurrent Account1Exports$1,167.612Imports($1,295.53)3Unilateral Transfers$6.13($45.01)Balance on Current Account($166.80)Ca

26、pital Account4Direct Investment$107.93($119.44)5Portfolio Investment$387.62($79.28)6Other Investments$194.95($227.2)Balance on Capital Account$264.587Statistical Discrepancies($96.76)Overall Balance$1.02Official Reserve Account($1.02)Including that, the balance of payments identity should hold:BCA +

27、 BKA = - BRA($166.80) + $264.58 + ($96.76) = $1.02= ($1.02)U.S. Balance of Payments DataCreditsDebitsCurrent Account1Exports$1,167.612Imports($1,295.53)3Unilateral Transfers$6.13($45.01)Balance on Current Account($166.80)Capital Account4Direct Investment$107.93($119.44)5Portfolio Investment$387.62($

28、79.28)6Other Investments$194.95($227.2)Balance on Capital Account$264.587Statistical Discrepancies($96.76)Overall Balance$1.02Official Reserve Account($1.02)QPExchange rate $DSU.S. Balance of Payments DataCreditsDebitsCurrent Account1Exports$1,167.612Imports($1,295.53)3Unilateral Transfers$6.13($45.

29、01)Balance on Current Account($166.80)Capital Account4Direct Investment$107.93($119.44)5Portfolio Investment$387.62($79.28)6Other Investments$194.95($227.2)Balance on Capital Account$264.587Statistical Discrepancies($96.76)Overall Balance$1.02Official Reserve Account($1.02) As U.S. citizens import,

30、they are supply dollars to the FOREX market.DSQPCreditsDebitsCurrent Account1Exports$1,167.612Imports($1,295.53)3Unilateral Transfers$6.13($45.01)Balance on Current Account($166.80)Capital Account4Direct Investment$107.93($119.44)5Portfolio Investment$387.62($79.28)6Other Investments$194.95($227.2)B

31、alance on Capital Account$264.587Statistical Discrepancies($96.76)Overall Balance$1.02Official Reserve Account($1.02)As U.S. citizens export, others demand dollars at the FOREX market.Exchange rate $PQDSU.S. Balance of Payments DataCreditsDebitsCurrent Account1Exports$1,167.612Imports($1,295.53)3Uni

32、lateral Transfers$6.13($45.01)Balance on Current Account($166.80)Capital Account4Direct Investment$107.93($119.44)5Portfolio Investment$387.62($79.28)6Other Investments$194.95($227.2)Balance on Capital Account$264.587Statistical Discrepancies($96.76)Overall Balance$1.02Official Reserve Account($1.02

33、)As the U.S. government sells dollars, the supply of dollars increases.Exchange rate $DSS1QPU.S. Balance of Payments DataChinas Balance of Payments Data(2013)CreditsDebitsCurrent Account($21,896)1Goods and services$24,250$1,8552Income ($2,293)3Unilateral Transfers$532($619)Balance on Current Account

34、Capital Account4Direct Investment$3,478($1,629)5Portfolio Investment$1,041($436)6Other Investments$12,752($11,944)Balance on Capital Account$3,2627Statistical Discrepancies($776)Overall Balance$4,314Official Reserve Account($4,314)$1,828 5.Balance of Payments TrendsSince 1982 the U.S. has experience

35、d continuous deficits on the current account and continuous surpluses on the capital account. See case study13.3, 13.4During the same period, Japan has experienced the opposite.see case study13.35.Balance of Payments TrendsGermany traditionally had current account surpluses.Since 1991 Germany has be

36、en experiencing current account deficits.This is largely due to German reunification and the resultant need to absorb more output domestically to rebuild the former East Germany. What matters is the nature and causes of the disequilibrium.Key wordsBalance of paymentsCreditDebitCapital inflows and outflowsDouble-entry bookkeepingCapital accountCurrent accountFDI