Course Hero Logo

C5. International Flow of Funds.pdf - INTERNATIONAL FINANCE...

Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. This preview shows page 1 - 12 out of 56 pages.

INTERNATIONAL FINANCENguyen Cong Thanh1
CHAPTER 5.INTERNATIONAL FLOW OF FUNDS2
LEARNING OUTCOMESA. Explain thekey componentsof the balanceof paymentB. Explainhowinternational trade flows areinfluencedbyeconomic factors and other factorsC.Explain how international capital flowsare influenced bycountry characteristics3
BALANCE OF PAYMENTS (BP)Summary of transactionsbetween domesticand foreignresidentsfor a specific countryover a specifiedperiod of time.4
BALANCE OF PAYMENTS (BP)Structure of BP:-Current account-Capital and Financial account-Errors and Omissions-Official Financing Balance5
ContentCash inflow (+)Cash outflow(-)Entry Balance ofpayment accountCACurrent accountCA = (TB + SE + IC + TR)-70TBBalance of merchandise-50Merchandise Export150Merchandise Import-200SEBalance of services-40Service export120Service import-160ICFactor income10Inflow of funds20Outflows of funds-10TRTransfers10Inflow30Outflow-20KCapital and Financial AccountsK = (KL+ KS + KTR)60KLLong capital90Inflow140Outflow-50KSShort capital-35Inflow20Outflow-55KTRTranfer Payment55OMErrors and Omissions-10-10OBOverall BalanceOB = CA + K + OM-20OFBOfficial Financing BalanceOFB = -OB20∆RReserve change1515LIMF and other central bank loans55#Other funds00Total505-50506
ContentYear of 2014ACurrent account8.896Merchandise Export and Import11.913Service Export and Import(3.530)Factor income(9.095)Transfers9.608BCapital Accounts(712)CFinancial Accounts(1.150)Direct foreign investment8.050Indirect foreign investment93Other investment(2.317)DErrors and Omissions(6.342)EOverall Balance8.380FOfficial Financing Balance(8.380)BALANCE OF PAYMENTS (BP)72 maincomponents
CURRENT ACCOUNT(CA)Represents a summary of the flow of funds betweenone specified country and all other countriesdue topurchases of goods or services, or theprovision ofincomeon financial assets8
International TradeTransactionUSD cash flowpositionEntry on VNBalance ofPaymentsAccountMr A purchases stereosproduced in Indonesia thatit will sell in its VN. retailstores.USD cashoutflowDebitIndividuals in the Viet NampurchaseCDsovertheInternet from a firm basedin China.USD cashoutflowDebitThe Mexican governmentpays a V.N. consulting firmfor consulting servicesprovided by the firmUSD cash inflowCreditCURRENTACCOUNT(CA)9
Current AccountPayments formerchandiseTBPayments forservicesSEFactorincomepaymentsIcTransferpaymentsTrCURRENTACCOUNT(CA)10
PAYMENTS FOR MERCHANDISEDistribution of U.S. Exports and Imports. This isavisiblebalanceExports result in aninflowof funds =>Credit (+)on BPImports result in anoutflowof funds =>Debit (-)on BPWhen Exports be lower Imports => Balance of Tradedeficit11

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 56 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Fall
Professor
NoProfessor
Tags
Macroeconomics, International Economics, foreign exchange reserves

Newly uploaded documents

Show More

Newly uploaded documents

Show More

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture