Balance of payments/Addendum: Difference between revisions
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==Definition== | |||
According to the IMF ''Balance of Payments Manual''[http://www.imf.org/external/np/sta/bop/BOPman.pdf] the balance of payments is made up of transactions involving: goods, services and income; financial claims and liabilities; and gifts classified as transfers, and comprises two main groups of accounts: | According to the IMF ''Balance of Payments Manual''[http://www.imf.org/external/np/sta/bop/BOPman.pdf] the balance of payments is made up of transactions involving: goods, services and income; financial claims and liabilities; and gifts classified as transfers, and comprises two main groups of accounts: | ||
* a current account pertaining to goods and services, income, and current transfers; and | * a current account pertaining to goods and services, income, and current transfers; and | ||
* a capital and financial account pertaining to capital transfers and assets and financial assets and liabilities. | * a capital and financial account pertaining to capital transfers and assets and financial assets and liabilities. | ||
==Policy implications== | |||
In principle the balance of payments can be influenced by four possible policy measures | |||
* the use of domestic [[currency reserves]]; | |||
* action to alter the rate of [[inflation]]; | |||
* [[exchange rate]] changes ; | |||
* restrictions upon domestic access to foreign exchange (''[[exchange controls]]''). | |||
Revision as of 08:08, 6 June 2009
Definition
According to the IMF Balance of Payments Manual[1] the balance of payments is made up of transactions involving: goods, services and income; financial claims and liabilities; and gifts classified as transfers, and comprises two main groups of accounts:
- a current account pertaining to goods and services, income, and current transfers; and
- a capital and financial account pertaining to capital transfers and assets and financial assets and liabilities.
Policy implications
In principle the balance of payments can be influenced by four possible policy measures
- the use of domestic currency reserves;
- action to alter the rate of inflation;
- exchange rate changes ;
- restrictions upon domestic access to foreign exchange (exchange controls).