IEU - Lecture 2 - BoP - Lecture 2 Payments among Nations...

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Lecture 2 Payments among Nations 
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Balance of payments A country's balance of payments records  all economic transactions between the  residents of the country and residents of  the rest of the world. 
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Credit and debit credit  (+) is the flow for which the  country is paid - funds or money flow into  the country.  debit  (-) is the flow that the country must  pay for - funds or money flow out of the  country. 
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Balance of payments consists of Current account Capital account International reserves Statistical discrepancy
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Current account Merchandise trade:  goods Services  trade :   transportation tourism insurance financial services telecommunications education consulting royalties for use of technologies or brand names Income payments: interests  dividends profits Unilateral transfers  gifts aid migrant's remittances 
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Capital account Foreign Direct Investment Portfolio investment stocks bonds Cross-border loans and bank deposits.
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International reserves The country's monetary authority (usually, its central  bank) undertakes these transactions. Official  international reserves include financial assets  denominated in readily accepted foreign currencies,  the country's holdings of Special Drawing Rights  (SDRs), the country's reserve position at the  International Monetary Fund (IMF), and gold.
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Statistical discrepancy If all items are recorded correctly, the sum of all of  these items equal zero. In practice, they are not 
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This note was uploaded on 08/06/2009 for the course ECONOMICS ECON 306 taught by Professor Alperduman during the Spring '09 term at Izmir University of Economics.

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IEU - Lecture 2 - BoP - Lecture 2 Payments among Nations...

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