1PART4TheBalanceofPayments,ForeignExchangeMarkets,andExchangeRates
2Chapter10BalanceofPayments
3Contents10.1Introduction10.2Balance-of-payments:DefinitionandUse10.3Balance-of-paymentsAccountingPrinciples10.4Double-EntryBookkeeping10.5TheInternationalTransactionofChina10.6AccountingBalancesandDisequilibriuminInternationalTrade10.7MeasuringDeficitsorSurplusintheBalanceofPayments10.8TheinternationalInvestmentPosition
10.1Introduction4Themonetaryaspectsofinternationaleconomy–internationalfinance
10.2Balance-of-payments:DefinitionandUseThebalanceofpaymentsprovidesarecordofinternationaltransactionsbetweenresidentsofonecountryandtherestoftheworld.ThepurposeGovn’t,banks,firms,individualsAsummarystatementTransactioncannotappearindividuallyNotdirectlyinvolvedtransactions
InternationalTransactionInternationaltransactionsincludeexchangesofgoods,servicesorassetsb/wtheresidentsofonenationandtheresidentsofothernations.Giftsandcertainnopaymenttransfers
Whoisa‘resident’?‘Residents’meansbusinesses,individualsandgovernmentagencies,includingcitizenstemporarilylivingabroadbutexcludinglocalsubsidiariesofforeigncorporationsTimedimension
10.3Balance-of-paymentsAccountingPrinciples:CreditsandDebitsCredittransactions(+)Transactionsthatinvolvereceiptofpaymentsfromforeignsources.MajortypesExportsofgoodsandservicesCapitalinflowsIncreasesinforeignassetsinanationDecreasesinanation’sassetsabroad
Debits9Debittransactions(-)Transactionsthatinvolvepaymenttoforeignsources.MajortypesImportsofgoodsandservicesCapitaloutflowsIncreasesinanation’sassetsabroadDecreasesinforeignassetsinanation
10.4Double-EntryBookkeepingDouble-EntryBookkeepingEveryinternationaltransactionautomaticallyentersthebalanceofpaymentstwice:onceasacredit(+)andonceasadebit(-).Eachcredittransactionhasabalanc