1、Unit 9Text:The Balance of Payments（国际收支）1.Key words2.Definition and importance of the balance of payments3.Economic factors affecting the balance of payments4.Principles and composition of the balance of payments5.Ways of looking at the balance of payments6.Questionsinternational financebalance of p
2、aymentsnon-residentspot exchange ratemerchandise exports and importsinflows and outflowspropensity to importIMFdebit itemcredit itemdouble entry bookkeeping systembank accountunilateral or unrequited transfersocial securitygovernment-to-government grantscurrent accountcapital accountofficial reserve
3、s accountmerchandise tradetrade balancelong-term loantrade deficitofficial settlements balanceinternational reservescentral bank2.1 Definition of the balance of payments2.2 Importance of the balance of paymentsThe balance of payments is the record of the economic and financial flows that take place
4、over a specified time period(usually one calendar year)between residents and non-residents of a given country.Demonstrating the healthiness of a countrys currency.Long term currency movements and exchange rate changes can be predicted from the analysis of such data.Reporting information about the ex
5、portation and importation of goods and services.The exportation of these items provides a supply of foreign exchange while the importation of them provides demand for foreign exchange.helping in the forecast of a countrys market potential in the short run.A country with a serious deficit is not like
6、ly to import as much as if it has a surplus.Showing pressure on the countrys foreign exchange rate and the potential for gains and losses for a firm trading or investing in that country.Continuing deficits may signal future government controls on outgoing capital movements,e.g.,dividends,management
7、fees,interest payments,or royalties to foreign firms and investors.3.1 Inflation rate3.2 Real growth in GNP3.3 Interest rates3.4 Spot exchange rateInflation may lead to price level increases,which make domestic goods and services relatively too expensive for nondomestic buyers.Exports will become le
8、ss competitive and imports will become more attractive to domestic consumers.As exports decline and imports rise,the balance of trade sector in the balance of payments may become negative,and if this trade deficit is not balanced by capital flows,the basic balance of the balance of payments may be i
9、n deficit.High rates of growth in GNP tend to cause consumers to import more goods and services from abroad.Higher GNP pushes personal income up and if consumers have a high propensity to import because of relatively higher incomes,imports may increase faster than export,causing a dampening effect o
10、n the balance of payments.Lower GNP will usually result in lower imports of goods and services.Interest rates influence foreign investments in money and capital market instruments in a given country.If a country has high real interest rates relative to other countries,it will experience high inflows
11、 of funds for investment in financial instruments.When real interest rates decline in a country,capital outflows occur and the basic balance deficit may increase.Expectations about the level of future interest rates may also have an impact on investment flows into and out of a country.Spot exchange
12、rates influence the relative cost of imports vis-vis domestic goods and the relative cost of exports vis-vis foreign goods in importing countries.Relatively high exchange rates of the foreign currency compared to the domestic currency discourage imports and encourage exports.4.1 Principles of the ba
13、lance of payments4.2 Composition of the balance of payments4.1.1 Debit and credit items 4.1.2 Double entry bookkeeping system4.1.3 Unilateral transfer account4.1.4 The balance of payments is always in balanceAll transactions that require a payment to foreign citizen or government,i.e.,imports of goo
14、ds and services,are entered in the balance of payments accounts as a debit item with a negative()sign.All transactions that result in a payment from foreign countries,i.e.,exports of goods and services,are entered as a credit item with a positive(+)sign.Essentially,the balance of payments is based o
15、n a double entry bookkeeping system.Every transaction enters the balance of payments accounts twice,once as a credit and once as a debit.The unilateral transfer account or unrequited transfers is an account found in the current account of the balance of payments.Unrequited transfers may be private o
16、r public.These are payments that are outflows of funds,or debit items.Private unilateral or unrequited transfers are primarily pension payments.Public,or official,unrequited transfers are economic or military assistance exports made to foreign countries in the form of government-to-government grants
17、.The bottom line of a countrys balance of payments has been adjusted by various entries so that no imbalancesurplus or deficitexists.4.2.1 Current account4.2.2 Capital account4.2.3 Official reserves accountThe current account entries are for those transactions that take place and are settled during
18、the period of the balance of payments.Capital account entries are for those transactions that have a longer time horizon,such as direct and portfolio investments by one countrys companies in another country.Official reserve account entries show the change in the nations official reserves as a result
19、 of what occurs in the current and capital accounts.A nations receipts less its payments equals the nations balance of payments.Perhaps the most important section in the balance of payments is the balance of trade,the net balance of exports and imports of merchandise trade.When the balance of paymen
20、ts is said to be in surplus or deficit,it is the balance on current and capital account that is actually in surplus or deficit.This is also referred to as the basic balance,i.e.,the balance on current and capital account.The official settlements balance measures the amount of governmental funds need
21、ed to finance payments flows.(1)What does the balance of payments tell analysts?(2)Give an example of each of the major categories in the current account of the balance of payments.(3)Give an example of each of the major categories in the capital account of the balance of payments.(4)Explain what economic factors might affect the balance of payments,and how they affect it.
