a framework for the open economy

a framework for the open economy - Lecture#8 A Framework...

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FEcon 1110, Spring 2008, Professor T 1 Lecture #8 A Framework for the Open Economy
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FEcon 1110, Spring 2008, Professor T 2 Balance of Payments Accounting Basic Principles Credit item (+) Funds flow into the country Debit item (–) Funds flow out of the country
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FEcon 1110, Spring 2008, Professor T 3 The Current Account Net Exports of Goods and Services ( NX ) Net Income from Abroad (virtually equivalent to NFP ) Net Unilateral Transfers ( NUT ) CA = NX + NFP + NUT
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FEcon 1110, Spring 2008, Professor T 4 U.S. Current Account, 2005-III (billions of dollars, seasonally adjusted) CURRENT ACCOUNT Net exports of goods and services ( NX ) -182.8 Exports of goods and services 320.8 Goods 225.2 Services 95.5 Imports of goods and services -503.6 Goods -423.2 Services -80.4 Net income from abroad ( NFP ) 0.5 Income receipts from abroad 118.7 Income payments to residents of other countries -118.2 Net unilateral transfers ( NUT ) -13.5 Current Account Balance ( CA ) -195.8
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FEcon 1110, Spring 2008, Professor T 5 The Capital and Financial Account Capital Account (unilateral transfers of assets) Financial Account Financial Inflow Credit item (+) Sale of U.S. assets to foreigners Financial Outflow Debit item (–) Purchase of foreign assets by U.S. residents KFA = capital and financial account balance
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a framework for the open economy - Lecture#8 A Framework...

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