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Unformatted text preview: 1 Econ 100B Fall 2008 Discussion Section Notes Prepared by Hongyan Zhao ([email protected]) 9/22 and 9/23 Sections 1. Review of Lectures 1.1 Balance of Payments Accounting The Balance of Payments Accounts are a summary of a country’s net international transactions. • Credit: international receipts, funds flowing into a country, demand for the domestic currency (in the foreign exchange market) • Debit: international payments, funds flowing out of a country, supply for the domestic currency (in the foreign exchange market) The Current Account balance ܥܣ ൌ ܰܺ ܰܨܲ ܷܰܶ • Net exports of goods and services ( ܰܺ ): exports ( ܺ ) ‐ imports ( ܯ ) • Net income from abroad ( ܰܨܲ ): investment income on foreign assets owned by domestic residents ‐ investment payments on domestic assets owned by foreign residents, • Net unilateral transfers ( ܷܰܶ ): transfers to domestic residents ‐ transfers to foreign residents The Capital and Financial Account balance, ܭܨܣ consists of: • The Capital Account balance: net flow of unilateral transfers of assets into or out of a country. • The Financial Account balance: Net purchases of domestic assets by foreign residents ‐ net purchases of foreign assets by domestic residents The Official Settlements Account balance, ܱܵܣ (also called the “balance of payments”): • Net transactions between central banks using official reserve assets to make international payments in the foreign exchange market....
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- Fall '08
- International Economics, current account, capital account, net foreign lending