国际金融学theory-of-balance-of-payments课件.ppt

1、1ContentsqNational Income AccountqBalance of Payments AccountqAssignments2qNational Income AccountI.Identities in a Closed EconomyY=C+I+G *Where,Y,C,I,and G denote output,consumption,and government expenditure respectively.National income can also be divided into C,Sp(private saving),and T(taxes),th

2、us,Y=C+Sp+T *The two measures are equivalent,henceY=C+I+G=C+Sp+T3 After a very simple manipulation,one can easily obtain,I=Sp+(T-G)Where,(T-G)in the right hand is government saving(Sg).Therefore,I=S=Sp+Sg This is the identity we are quite familiar with.II.Identities in an Open EconomyII.1 What Is Op

3、en Economy?Cross border movements of commodity,capital&labor.qNational Income Account4II.2 International Flows of CommoditiesIdentity Let X represent exports,M represent imports,Y=C+I+G+X-M Where,X-M is also referred to as net export or trade balance(a case of China is illustrated in Figure 1-1-1).O

4、penness of Trade:Openness=(X+M)/Output%An example is presented in Figure 1-1-2.An imaginary exampleqNational Income Account5Figure 1-1-1 Chinas Net ExportSource:NBSC;in 100 million RMB01000020000300004000050000600007000080000-8000-400004000800012000160002000024000505560657075808590950005EXPORTIMPORT

5、NEXPORT6Figure 1-1-2 Chinas OpennessSource:NBSC;in 100 million RMB&%040000800001200001600002000002400002800000102030405060705560657075808590950005XPLUSMGDPOPENNESS7 An imaginary economy,Agraria,whose only output is wheat.Each citizen is a consumer of wheat,and also a farmer.Farmers invest by putting

6、 aside a portion of each years crop as seed for the following years planting.There is also a government that appropriates part of the crop to feed the Agrarian army.Agrarias total annual crop is 100 bushels of wheat.Agraria can import milk from the rest of the world in exchange for exports of wheat.

7、We cannot draw up the Agrarian national income accounts without knowing the price of milk in terms of wheat.Assume the price of milk is 0.5 bushel of wheat per gallon,and Agrarians want to consume 40 gallons of milk,then its imports are equal to 20 bushels of wheat.qNational Income Account8Source:Kr

8、ugman and Obstfeld(2003),pp.300-301.The table below presents a simple calculation of the countrys national income account.Consumption is divided between wheat and milk,with 55 bushels of wheat and 40 gallons of milk(20 bushels of wheat)consumed.25 bushels of wheat are invested,10 are purchased by th

9、e government,and 10 are exported abroad.GNP Government(total output)=Consumption +Investment +Purchases +Exports Imports 100 =75a +25 +10 +10 20b a.55 bushels of wheat+(0.5 bushel per gallon)(40 gallons of milk)b.0.5 bushel per gallon (40 gallons of milk).qNational Income Account9II.3 A Glimpse of O

10、utput Components Consumption The largest component of a countrys output(see Figures 1-1-3 and 1-1-4 for an illustration of both the U.S.and Chinas consumptions shares).In the U.S.the share of consumption in the GDP ranges from 62-70%ever since the Korean War.China is a little bit lower,however.It se

11、ems that the U.S.has been consuming too much while on the contrary,Chinese has been consuming too little since 1970s.qNational Income Account10Investment In the U.S.,(gross)investment has fluctuated between 12 and 19%of GNP in recent years(Figure 1-1-4).However,it is quite another picture for China.

12、As we can see from Figure 1-1-3 or Table 1-1-2,there exists a phenomenon called overheated investment in China,which is a main contributor to Chinas overheated economy nowadays.Notice also that investment here is necessarily different from the term commonly used in finance!qNational Income Account11

13、Government Purchases As we can see from Figures 1-1-3 and 1-1-4,there is no significant difference between the two economy.Net Export Figure 1-1-4 tells us that since the mid 1970s,the imports have been overrunning the exports in the U.S.Question:Is there any linkage between the consumption and net

14、export in an open economy?qNational Income Account12Figure 1-1-3 Components of Chinas GNPSource:NBSC;in percentage-10010203040506078 80 82 84 86 88 90 92 94 96 98 00 02 04 06CONSUMTIONINVESTMENTGOVERNMENTNETEX13-100102030405060708060657075808590950005CONSUMPTIONINVESTMENTGOVERNMENTNETEXPORTFigure 1-

15、1-4 Components of the U.S.GDPSource:Dept.of Commerce;in percentage14Table 1-1-1 Contributions of C,I,&Net ExportsSource:NBSCFinal consumption expenditure Gross capital formation Net exports of goods&services share（%）contribution（percentage points）share（%）contribution（percentage points）share（%）contri

16、bution（percentage points）1978-1993 Mean 63.43 6.32 35.41 3.91 11.70-0.36 Variance 17.07 2.85 24.35 3.50 26.72 3.06 1994-2006 Mean 47.28 4.44 40.49 3.97 12.22 1.52 Variance 13.52 0.84 18.51 1.96 22.44 2.20 1978-2006 Mean 56.19 5.48 37.69 3.94 11.93 0.40 Variance 17.36 2.36 21.70 2.86 24.46 2.86 Note:

17、C includes both private consumption and government consumption(G).15III.GNP&GDP in an Open Economy When capital and labor factors can flow outside,the difference between GNP and GDP emerges.III.1 What Is GNP?Gross National Product(GNP)is the market value of all final goods and services produced by a

18、 countrys factors of production in a given time period.It is a basic measure of a countrys national income.Usually,“the GNP a country generates over some time period must equal its national income,the income earned in that period by its factors of production.”(See Krugman and Obstfeld(2003,p.296)for

19、 a simple explanation)qNational Income Account16III.2 What Is GDP?Gross Domestic Product(GDP)is supposed to measure the market value of production within a countrys borders.III.3 What Is the Difference?In a closed economy,GDP equals GNP.In an open economy,GNP equals GDP plus the income earned by a c

20、ountrys residents in other countries less those earned by other countrys residents in the domestic.qNational Income Account17 For simplicity,we may have,GNP=GDP+NFP Where,NFP is the income of net factor production.“As a practical matter,movements in GDP and GNP usually do not differ greatly.”(Krugma

21、n&Obstfled,p.298)An illustration of the relation and the slight difference between GNP and GDP can be found in Table 1-1-2.Note:We will use GNP in the course hereafter.qNational Income Account18Table 1-1-2 Chinas GDP,GNP&NFPSource:NBSC;in 100 million RMB G N P G D P N F P N F P/G N P N F P/G D P 1 9

22、 7 8 3 6 4 5.2 3 6 4 5.2 0 0.0 0 0.0 0 1 9 7 9 4 0 6 2.6 4 0 6 2.6 0 0.0 0 0.0 0 1 9 8 0 4 5 4 5.6 4 5 4 5.6 0 0.0 0 0.0 0 1 9 8 1 4 8 8 9.5 4 8 9 1.6 -2.1 0.0 0 0.0 0 1 9 8 2 5 3 3 0.5 5 3 2 3.4 7.1 0.0 0 0.0 0 1 9 8 3 5 9 8 5.6 5 9 6 2.7 2 2.9 0.0 0 0.0 0 1 9 8 4 7 2 4 3.8 7 2 0 8.1 3 5.7 0.0 0 0.

23、0 0 1 9 8 5 9 0 4 0.7 9 0 1 6 2 4.7 0.0 0 0.0 0 1 9 8 6 1 0 2 7 4.4 1 0 2 7 5.2 -0.8 0.0 0 0.0 0 1 9 8 7 1 2 0 5 0.6 1 2 0 5 8.6 -8 0.0 0 0.0 0 1 9 8 8 1 5 0 3 6.8 1 5 0 4 2.8 -6 0.0 0 0.0 0 1 9 8 9 1 7 0 0 0.9 1 6 9 9 2.3 8.6 0.0 0 0.0 0 1 9 9 0 1 8 7 1 8.3 1 8 6 6 7.8 5 0.5 0.0 0 0.0 0 1 9 9 1 2 1

24、 8 2 6.2 2 1 7 8 1.5 4 4.7 0.0 0 0.0 0 1 9 9 2 2 6 9 3 7.3 2 6 9 2 3.5 1 3.8 0.0 0 0.0 0 1 9 9 3 3 5 2 6 0 3 5 3 3 3.9 -7 3.9 0.0 0 0.0 0 1 9 9 4 4 8 1 0 8.5 4 8 1 9 7.9 -8 9.4 0.0 0 0.0 0 1 9 9 5 5 9 8 1 0.5 6 0 7 9 3.7 -9 8 3.2 -0.0 2 -0.0 2 1 9 9 6 7 0 1 4 2.5 7 1 1 7 6.6 -1 0 3 4.1 -0.0 1 -0.0 1

25、 1 9 9 7 7 8 0 6 0.8 7 8 9 7 3 -9 1 2.2 -0.0 1 -0.0 1 1 9 9 8 8 3 0 2 4.3 8 4 4 0 2.3 -1 3 7 8 -0.0 2 -0.0 2 1 9 9 9 8 8 4 7 9.2 8 9 6 7 7.1 -1 1 9 7.9 -0.0 1 -0.0 1 2 0 0 0 9 8 0 0 0.5 9 9 2 1 4.6 -1 2 1 4.1 -0.0 1 -0.0 1 2 0 0 1 1 0 8 0 6 8.2 1 0 9 6 5 5.2 -1 5 8 6.9 5 -0.0 1 -0.0 1 2 0 0 2 1 1 9

26、0 9 5.7 1 2 0 3 3 2.7 -1 2 3 7 -0.0 1 -0.0 1 2 0 0 3 1 3 5 1 7 4 1 3 5 8 2 2.8 -6 4 8.7 8 0.0 0 0.0 0 2 0 0 4 1 5 9 5 8 6.7 1 5 9 8 7 8.3 -2 9 1.5 9 0.0 0 0.0 0 2 0 0 5 1 8 4 7 3 9.1 1 8 3 8 6 7.9 8 7 1.1 9 0.0 0 0.0 0 2 0 0 6 2 1 1 8 0 8 2 1 0 8 7 1 9 3 7.0 5 0.0 0 0.0 0 19IV.Current Account Analys

27、isIV.1 Current Account,Import&Export For countries like China,net export is a major component of the current account(See Figure 1-1-5).In other words,if we neglect NFP,current account equals to the net export.Let CA denote current account balance,thus,CA=X-M,if NFP=0 See also Figure 1-1-5.qNational

28、Income Account2005000010000015000020000025000030000002468101294959697989900010203040506CANEXRATIOFigure 1-1-5 Chinas Current AccountSource:NBSC;in million$and%21IV.2 Current Account&Domestic Absorption As we have known that,Y=C+I+G+X-M,if NFP=0 In the right hand of the identity,C,I,and G constitutes

29、 the gross expenditures of a countrys residents.We use A hereinafter to represent this item,we then obtain,A=C+I+G In this way,current account can also be viewed as the abstraction of national income and absorption.CA=Y-AqNational Income Account22What can we learn from CA=Y-A?Conclusions:The identit

30、y simply means that in an open economy,a countrys income must not equal to the domestic expenditures,which should be hold in the closed economy.Also this tells us that in an open economy,resources can be allocated internationally.Table 1-1-3 shows the relations among these variables in China.Where Y

31、 is approximated by GDP,and column 8 is calculated according to the identity.We can see that it is the same to the time series data in column 6.qNational Income Account23Table 1-1-2 Chinas Absorption&IncomeSource:NBSC;in 100 million RMB Y C I G （X-M）A C A=Y-A 1 9 7 8 3 6 0 5.6 1 7 5 9.1 1 3 7 7.9 4

32、8 0 -1 1.4 3 6 1 7 -1 1.4 1 9 7 9 4 0 9 2.6 2 0 1 1.5 1 4 7 8.9 6 2 2.2 -2 0 4 1 1 2.6 -2 0 1 9 8 0 4 5 9 2.9 2 3 3 1.2 1 5 9 9.7 6 7 6.7 -1 4.7 4 6 0 7.6 -1 4.7 1 9 8 1 5 0 0 8.8 2 6 2 7.9 1 6 3 0.2 7 3 3.6 1 7.1 4 9 9 1.7 1 7.1 1 9 8 2 5 5 9 0 2 9 0 2.9 1 7 8 4.2 8 1 1.9 9 1 5 4 9 9 9 1 1 9 8 3 6

33、2 1 6.2 3 2 3 1.1 2 0 3 9 8 9 5.3 5 0.8 6 1 6 5.4 5 0.8 1 9 8 4 7 3 6 2.7 3 7 4 2 2 5 1 5.1 1 1 0 4.3 1.3 7 3 6 1.4 1.3 1 9 8 5 9 0 7 6.7 4 6 8 7.4 3 4 5 7.5 1 2 9 8.9 -3 6 7.1 9 4 4 3.8 -3 6 7.1 1 9 8 6 1 0 5 0 8.5 5 3 0 2.1 3 9 4 1.9 1 5 1 9.7 -2 5 5.2 1 0 7 6 3.7 -2 5 5.2 1 9 8 7 1 2 2 7 7.4 6 1

34、2 6.1 4 4 6 2 1 6 7 8.5 1 0.8 1 2 2 6 6.6 1 0.8 1 9 8 8 1 5 3 8 8.6 7 8 6 8.1 5 7 0 0.2 1 9 7 1.4 -1 5 1.1 1 5 5 3 9.7 -1 5 1.1 1 9 8 9 1 7 3 1 1.3 8 8 1 2.6 6 3 3 2.7 2 3 5 1.6 -1 8 5.6 1 7 4 9 6.9 -1 8 5.6 1 9 9 0 1 9 3 4 7.8 9 4 5 0.9 6 7 4 7 2 6 3 9.6 5 1 0.3 1 8 8 3 7.5 5 1 0.3 1 9 9 1 2 2 5 7

35、7.4 1 0 7 3 0.6 7 8 6 8 3 3 6 1.3 6 1 7.5 2 1 9 5 9.9 6 1 7.5 1 9 9 2 2 7 5 6 5.2 1 3 0 0 0.1 1 0 0 8 6.3 4 2 0 3.2 2 7 5.6 2 7 2 8 9.6 2 7 5.6 1 9 9 3 3 6 9 3 8.1 1 6 4 1 2.1 1 5 7 1 7.7 5 4 8 7.8 -6 7 9.5 3 7 6 1 7.6 -6 7 9.5 1 9 9 4 5 0 2 1 7.4 2 1 8 4 4.2 2 0 3 4 1.1 7 3 9 8 6 3 4.1 4 9 5 8 3.3

36、6 3 4.1 1 9 9 5 6 3 2 1 6.9 2 8 3 6 9.7 2 5 4 7 0.1 8 3 7 8.5 9 9 8.6 6 2 2 1 8.3 9 9 8.6 1 9 9 6 7 4 1 6 3.6 3 3 9 5 5.9 2 8 7 8 4.9 9 9 6 3.6 1 4 5 9.2 7 2 7 0 4.4 1 4 5 9.2 1 9 9 7 8 1 6 5 8.5 3 6 9 2 1.5 2 9 9 6 8 1 1 2 1 9.1 3 5 4 9.9 7 8 1 0 8.6 3 5 4 9.9 1 9 9 8 8 6 5 3 1.6 3 9 2 2 9.3 3 1 3

37、1 4.2 1 2 3 5 8.9 3 6 2 9.2 8 2 9 0 2.4 3 6 2 9.2 1 9 9 9 9 1 1 2 5 4 1 9 2 0.4 3 2 9 5 1.5 1 3 7 1 6.5 2 5 3 6.6 8 8 5 8 8.4 2 5 3 6.6 2 0 0 0 9 8 7 4 9 4 5 8 5 4.6 3 4 8 4 2.8 1 5 6 6 1.4 2 3 9 0.2 9 6 3 5 8.8 2 3 9 0.2 2 0 0 1 1 0 8 9 7 2.4 4 9 2 1 3.2 3 9 7 6 9.4 1 7 6 6 5.1 2 3 2 4.7 1 0 6 6 4

38、7.7 2 3 2 4.7 2 0 0 2 1 2 0 3 5 0.3 5 2 5 7 1.3 4 5 5 6 5 1 9 1 1 9.9 3 0 9 4.1 1 1 7 2 5 6.2 3 0 9 4.1 2 0 0 3 1 3 6 3 9 8.8 5 6 8 3 4.4 5 5 9 6 3 2 0 6 1 5.1 2 9 8 6.3 1 3 3 4 1 2.5 2 9 8 6.3 2 0 0 4 1 6 0 2 8 0.4 6 3 8 3 3.5 6 9 1 6 8.4 2 3 1 9 9.4 4 0 7 9.1 1 5 6 2 0 1.3 4 0 7 9.1 2 0 0 5 1 8 8

39、6 9 2.1 7 1 2 1 7.5 8 0 6 4 6.3 2 6 6 0 5.2 1 0 2 2 3.1 1 7 8 4 6 9 1 0 2 2 3.1 2 0 0 6 2 2 1 1 7 0.5 8 0 1 2 0.5 9 4 1 0 3.2 3 0 2 9 2.7 1 6 6 5 4.1 2 0 4 5 1 6.4 1 6 6 5 4.1 24IV.3 Current Account&International Investment Position(IIP)International Investment PositionIdentity:CAt=NIIPt-NIIPt-1 Int

40、ernational Investment Position means that a country may continue to be in a deficit position on the current account in a certain time period,but it can not enjoy this forever.This probably could be best illustrated by the so-called Ponzi game.See Figure 1-1-6 for an illustration.IV.4 Current Account

41、,Saving&Investment As we have seen,Y=C+I+G+X-M=C+Sp+TqNational Income Account25-2800-2400-2000-1600-1200-800-4000400198019851990199520002005NIIPCAFigure 1-1-6 U.S.Current Account&NIIPSource:Bureau of Economic Analysis(in billions of dollars)26 By simple manipulation,we have,CA=S-I,or S=I+CA Note aga

42、in:S is not the money deposited in the banking system,but the reminder of national income less consumption and government purchases,i.e.,S=Y-C-G.Conclusion:An open economy can save either by building up its capital stock or by acquiring foreign wealth,but a closed economy can save only by building u

43、p its capital stock(Krugman and Obstfeld,2003,p.304).qNational Income Account27 We may divide S into private saving and government saving for meaningful researches.Private Saving is defined as the part of disposable income that is saved rather than consumed.Private saving,denoted by Sp,can be expres

44、sed asSp=Y-T-C Government Saving is defined as the government income less its consumption.Let Sg stand for government saving,then,Sg=T-GqNational Income Account28 The two types of saving we have defined above add up to a countrys national saving,i.e.,S=Sp+Sg Finally,we can redefine the relation amon

45、g current account,saving,and investment in an open economy,CA=(Sp-I)+(T-G)Note also that S is not directly presented by statistical yearbooks in China,but may be estimated by the identities we offer.And see“case study”in the textbook on page 306-307 for a discussion on the U.S.vs.Japan.qNational Inc

46、ome Account29I.Balance of Payments A countrys Balance of Payments keeps record of economic transactions between a countrys residents and its non-residents in a given time period,usually in a year.We shall pay special attention to the following concepts:I.1 Flow vs.StockI.2 Resident vs.Non-resident T

47、he International Monetary Fund(IMF)has ever offered an explanation to the concept.qBalance of Payments Account30 See stipulations by the IMF in the fifth edition of“Balance of Payments Manual”on page 20-21.I.3 Economic Transactions Economic transactions are made up of the following five components:T

48、ransactions among financial assets and goods and servicesBartersTransactions among financial assets,such as securities tradingUnilateral goods and services transferUnilateral financial assets transferqBalance of Payments Account31II.Basic Accounting PrinciplesII.1 Examples of Paired Transactions Dou

49、ble-entry bookkeeping:e.g.1-1-1.Imagine you buy a typewriter from the Italian company Olivetti and pay for your purchase with a RMB1,000 check.The transactions may be recorded as follows.Source:Krugman and Obstfeld(2003).qBalance of Payments Account Credit Debit Typewriter purchase(Current Account)-

50、RMB1,000 Sale of Deposit(Financial Account)+RMB1,000 32 e.g.1-1-2.Suppose during your travels in France,you pay RMB200 for a dinner at the Restaurant de lEscargot dOr.You place the charge on your credit card.The transactions may be recorded as follows.Source:Krugman and Obstfeld(2003).qBalance of Pa