Escolar Documentos
Profissional Documentos
Cultura Documentos
Principal Items:
Trade Account
+ Exports of goods
- Imports of goods
+ Net Factor Income from Abroad
= Current Account
+ Capital Account
= Balance of Payments
= Transaction changes in foreign exchange reserves held by the central bank
(RFX)
Comment on items! Link to the income statement and net savings, as well as the money supply
process, Fixed v.s. floating exchange rate regimes. Basic definition: RFX = 0 if the exchange rate is
freely floating. A fixed rate implies that RFX 0, the central bank must buy and sell foreign currency
to clear the FX market at the fixed parity.
= RFX Change in foreign exchange reserves. RFX is known! Zero if freely floating
Or,
Currenct account
+Capital account
+ Errors and Omissions (The errors and omissions are added here
to make the identity hold)
+ RFX
=0
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11
+ Financial Account
+ Errors and Omissions
= Overall balance
[= - Official settlement balance ( - Change in foreign exchange reserves)]
= - Financing
- Change in foreign exchange reserves
Use of fund credit and loans
Exceptional financing
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13