balance of payments vocab

balance of payments

record of value of all transactions btwn residents of one country + all other countries over given period of time

current account

measure of flow of funds from trade in goods + services + net investment income flows (profit, interest, dividends) + net transfers of money (foreign aid/grants, remittances)

current account deficit

revenue from exports is LESS than imports of goods/service + income flows in given year

current account surplus

revenue from exports is MORE than imports of goods/service + income flows in given year

exports

when int’l transactions of goods/services leads to inflow of money

imports

when int’l transactions of goods/services leads to outflow of money

capital account

measure of buying + selling of assets btwn countries. assets often separated to represent ownership vs lending

credit item

money entering country from abroad = pos value in BoP

debit item

money leaving country from abroad = neg value in BoP

balance of trade in goods/visible trade balance/merch account balance

measure of revenue received from exports-imports of tangible goods over period of time

balance of trade in services/invisible balance/services balance/net services

measure of revenue received from exports-imports of services over period of time

current transfers

recorded in BoP when econ. receives goods, services, income, financial items WITHOUT something in return. all transfers not capital are current

current acount balance

balance of trade in goods + balance of trade in services + net income flows + net current transfers

capital transfers

measure of net monetary movements gained/lost through transfer of goods + financial assets by migrants entering/leaving country, transfers of sale of fixed assets, gift taxes, inheritance taxes, death duties

financial account

measure of net change in foreign ownership of domestic financial assets

direct investement

measure of purchase of long-term assets or purchaser aiming to gain lasting interest in company in another econ.

portfolio investement

purchase of financial investments (shares, bonds) to gain financial return in form of interest/dividends

reserve assets

foreign currencies + precious metals held by gov’t (central bank) as a result of int’l trade. reserves held so gov’t can maintain desired exchange rate for country’s currency