Multinational Financial Management（跨国公司财务管理）ch05 International Economic Linkages and Balance of Payments.ppt

CHAPTER 5 International Economic Linkages and Balance of Payments PART I. BALANCE-OF-PAYMENTCATEGORIES A. THE BALANCE OF PAYMENTS (B-O-P) 1. PURPOSE: Measures all financial and economic transactions over a specified period of time. BALANCE-OF-PAYMENTCATEGORIES 2. Double-entry bookkeeping a. Currency inflows = credits earn foreign exchange b. Currency outflows = debits expend foreign exchange BALANCE-OF-PAYMENTCATEGORIES 3. Three Major Accounts: a. Current b. Capital c. Official Reserves 4. Current Account records net flow of goods, services, and unilateral transfers. BALANCE-OF-PAYMENTCATEGORIES 5. Capital Account a. Function: records public and private investment and lending. b. Inflows = credits c. Outflows = debits BALANCE-OF-PAYMENTCATEGORIES 5. Capital Account (con’t) d. Transactions classified as 1.) portfolio 2.) direct 3.) short term BALANCE-OF-PAYMENTCATEGORIES 6. Official Reserves Account a. Function: 1.) measures changes in international reserves owned by central banks. 2.) reflects surplus/deficit of a.) current account b.) capital account BALANCE-OF-PAYMENTCATEGORIES 6. Official Reserves Account (con’t) b. Reserves consist of 1.) gold 2.) convertible securities BALANCE-OF-PAYMENTCATEGORIES 7. Net Effects: a. Sum of all transactions must be zero: 1.) current account 2.) capital account 3.) official reserves BALANCE-OF-PAYMENTCATEGORIES 8. The Balance-of-payment measures a. Some Definitions: 1.) Basic Balance a.) consists of current account and long-term capital flows. BALANCE-OF-PAYMENTCATEGORIES 1.) Basic Balance (con’t) b.) emphasizes long-term trends. BALANCE-OF-PAYMENTCATEGORIES 1.) Basic Balance (con’t) c.) excludes short-term capital flows that heavily depend on temporary factors. BALANCE-OF-PAYMENT CATEGORIES 2.) Net