Lecture 4a summary

Lecture 4(a)
Balance of payments
- Deconsolidation of NIPA Account 4
Consolidated Account 4 format:

T R A N S A CTIO N S WIT H THE R O W

X(g+s) Z(g+s)
Prim inc (factor) receipts Prim inc (factor) pay ments
Net curr transfer receipts
Bal on curr acc

Current receipts fro m R O W Current pay ments to RO W

Bal on curr acc Net cap move ments to RO W
 G +F R

Receipts Disburse ments

- Above is the NIPA account for account 4
o Consolidated account
- Balance of payments (BoP) → deconsildated account of the NIPA account 4
o Contains details on the magnitude of every possible transaction that
causes a flow of money (forein exchange) across the borders of a country.
o Includes:
▪ Trade transactions → facilitating reciprocal cross-border flows of
goods and services
▪ Financial transactions → reciprocal cross-border flows of any type of
financial instruments and non-recirporal cross-border transactions.
- Defintion for BoP:
o A systematic statistical summary or record of all economic transactions
between residents in the reporting country (e.g. South Africa) and the rest
of the world during a particular period (quarter or year).
o It includes all transactions by individuals, firms and government agencies
and covers the exchange of physical goods, services, assets, gifts and all
financial claims.




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