The Current account o Includes all imports and exports of goods and services Includes unilateral transfers of foreign aid If the debits exceed the credits, then a country is running a trade deficit McGraw-Hilylrwoin 3-5 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-5 The Current Account ⚫ Includes all imports and exports of goods and services. ⚫ Includes unilateral transfers of foreign aid. ⚫ If the debits exceed the credits, then a country is running a trade deficit
The Capital account The capital account measures the difference between U.S. sales of assets to foreigners and U. s purchases of foreign assets The U.S. enjoys about a$150, 000, 000,000 capital account surplus-absent of U.S. borrowing from foreigners, this"finances'our trade deficit The capital account is composed of Foreign Direct Investment(FDD, portfolio investments and other Investments McGraw-Hilylrwoin 3-6 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-6 The Capital Account ⚫ The capital account measures the difference between U.S. sales of assets to foreigners and U.S. purchases of foreign assets. ⚫ The U.S. enjoys about a $150,000,000,000 capital account surplus—absent of U.S. borrowing from foreigners, this “finances” our trade deficit. ⚫ The capital account is composed of Foreign Direct Investment (FDI), portfolio investments and other investments
Statistical Discrepancy o There's going to be some omissions and misrecorded transactions-so we use a plug figure to get things to balance Exhibit 3. 1 shows a discrepancy of $96. 76 billion in1997 McGraw-Hilylrwoin 3-7 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-7 Statistical Discrepancy ⚫ There’s going to be some omissions and misrecorded transactions—so we use a “plug” figure to get things to balance. ⚫ Exhibit 3.1 shows a discrepancy of $96.76 billion in 1997
The official reserves account Official reserves assets include gold, foreign currencies, SDRs, reserve positions in the IMf McGraw-Hilylrwoin 3-8 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 3-8 The Official Reserves Account ⚫ Official reserves assets include gold, foreign currencies, SDRs, reserve positions in the IMF