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Unformatted text preview: CA = $811 billion. KA + FA =+$800 billion. Difference: statistical error. U.S. trends for BOP items. Since 1990, U.S. current account deficit has grown. CA deficit financed through borrowing from abroad (FA surplus). Microeconomic View Each transaction in the balance of payments must involve a BOP credit and a BOP debit. Why? Every market transaction involves two parts: If party A engages in a transaction with party B, then A receives from B an item of given value. In return, B receives from A an item of equal value. Microeconomic View BOP credit items Current account (CA) Exports of goods and services (+EX) Exports of factor services (+EX FS ) Unilateral transfers received (+UT IN ) Financial account (FA) Exports of home and foreign assets (+EX H A , + EX F A ) Capital account (KA) Capital transfers received (+KA IN ) Microeconomic View...
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This note was uploaded on 03/02/2012 for the course EC 340 taught by Professor Ballie during the Spring '10 term at Michigan State University.
- Spring '10