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Balance of Payments

Balance of Payments



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Published by: api-3727090 on Oct 15, 2008
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Balance of payments
\u201cThe balance of payment is a statistical statement for a
given period showing
Transaction in goods and services and income
between an economy and the rest of the world

Changes of ownership and other changes in that
country\u2019s monetary gold, SDRs and claims and
liabilities to the rest of the world ,and


Unrequited transfers and counterpart entries that
are needed to balance, in the accounting sense,
any entries for the foregoing transactions and
changes which are not mutually offsetting.\u201d

- The IMF publication, \u201cBalance of
Payments Manual.\u201d
Components of BoP
Current account: - Merchandise exports and imports
- Invisible exports and Imports
Capital account:
- Short-term
- Long term
Unilateral Transfer Account: - Gifts
- Remittances
Official reserves account:- Gold
-convertible foreign exchange
Balance of payment disequilibrium
either a surplus
or a deficit
Factors causing Disequilibrium
1]. Economic factors
Development disequilibrium
Cyclical disequilibrium\ue001Lawrence W. Towle \u201cDepression always
brings about a drastic shrinkage in world trade, while prosperity
stimulates it.\u201d
Secular disequilibrium
Structural disequilibrium
2]. Political factors

political instability
change in world trade routes

3]. Social factors
changes in tastes preferences, fashion, etc.

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