1 Balance of payments

Is one better than the other 5 rule financialcapital

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Unformatted text preview: ts - Short term Debits - Short term + FR deposits in US banks + FR buys short term US securities (bills) + USR deposits in foreign banks + USR buys short term foreign securities (bills) + USR buys long term foreign stocks or bonds or makes along term loan to foreign resident + USR's FDI abroad via stock purchase or by buying land, building business asset, etc. Long term Long term + FR buys long term US stocks or bonds or makes along term loan to US resident + FR's FDI in US via stock purchase or by buying land, building business asset, etc. Financial Transactions (net) US owned assets abroad Foreign owned assets in US US Govt Securities Direct Investment Statistical Discrepancy -106 534,071 543,498 319,734 200,055 Question? What does a surplus on the capital account mean? the long-term-short term distinction important? Is (Official) Reserve Account Reserve Gold Currencies assets are those held by central banks and consist of : and securities of foreign governments Claims on IMF & SDRs So balance looks like this Credits Sales Debits Purchase of gold reserves Sales of foreign currencies, securities held by our central bank Reduction of SDRs or claims on IMF of gold Sale of domestic securities to foreign central banks or they increase holding of our currency Increase claims on IMF or holdings of SDRs Errors and Omissions In an ideal world, credits = debits Measurement is imperfect Some examples Mistakes in measurement Transfer prices Tax avoidance money laundering, capital...
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This note was uploaded on 02/09/2010 for the course ECON ecn302 taught by Professor Brada during the Spring '10 term at ASU.

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