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Lecture 17 Don DeVoretz

Lecture 17 Don DeVoretz. Balance of Payments , Current Account and Capital Account. Current Account :. 1. Exports of goods and Services = A 2. Imports of G and S = B

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Lecture 17 Don DeVoretz

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  1. Lecture 17Don DeVoretz Balance of Payments, Current Account and Capital Account

  2. Current Account: • 1. Exports of goods and Services = A • 2. Imports of G and S = B • 3. Investment Income = C • 4. Debt Service = D • 5. Remittances = E • Current Account = (A-B+C-D+E) < or > than 0

  3. Capital Account • 6. Direct Private Investment =G • 7. Foreign Loans = H • 8. Foreign Assets Domestic Banks = I • 9. Capital Outflow =K • Capital Account= (G+H-I-K)

  4. Equilibrium: Balance of Payments • +/- Cash Reserves = • Current Plus • Capital Account • What if no CASH Reserves in hard currency ? • BORROW

  5. From Whom ? • Private Banks: BNS • Bilateral Gov’t Loans • Japan,USA and EU • Multilateral • Inter-American Bank • IMF

  6. End of Show

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