(Tiểu luận) group worktopic balance of payments

NATIONAL ECONOMICS UNIVERSITY ‫ﻯﻯﻯﻯﻯﻯﻯﻯ‬ GROUP WORK Topic: BALANCE OF PAYMENTS Group’s : members Nguyễn Đức Phúc An (11210228) Nguyễn Kỳ Anh (11216846) Phạm Quang Anh (11210700) Phạm Tuấn Anh ( 11210720) Tạ Quỳnh Anh (11216849) Trần Thị Quỳnh Anh (11218583) Trịnh Duy Anh (11210796) Group : Class : International Economics 63C (AEP) TABLE OF CONTENTS Definition: Balance of payments: 2 The purpose of the balance of payments: .2 Accounting principles: Structures: a, Current account (CA) b, Capital and financial account (CFA): c, Statistical discrepancy: .9 d, Official reserve transaction: Balance of trade v/s balance of payment 12 Disequilibrium in the balance of payments 13 The importance of the BOP for the government 16 Vietnam’s BOP 16 1 Definition: Balance of payments: - All the transactions (good, service or asset) of the residents of a nation with the residents of all other nations are recorded during a particular period of time, usually a calendar year - International transactions made between the residents of all other nations are recorded during a particular period of time (usually a calendar year) The purpose of the balance of payments: - To inform the government of the international position of the nation - To formulate the monetary, fiscal and trade policies (the process of policy making helps in monitoring the flow of money and developing the economy Accounting principles: * Credits & debits - Credit transaction (+): The export of goods and services, as well as primary income, secondary income, and capital transfers receivable from abroad - Debit transaction (-): The imports of goods and services, as well as primary income, secondary income, and capital transfers payable to foreign residents - Net lending (+) from current- and capital-account transactions occurs when the total credits exceed the total debits in the nation’s current and capital accounts - Net borrowing (−) from current- and capital-account transactions occurs when the total debits exceed the total credits in the nation’s current and capital accounts * Financial inflow and outflow - Financial inflow: an increase in foreign assets in the nation or a reduction in the nation's assets abroad - Financial outflow: an increase in the nation's assets abroad or a reduction in foreign assets in the nation * Double-Entry Bookkeeping Each international transaction is recorded twice, once as a credit and once as a debit of an equal amount * Total BOP account must always in balance Debit amounts = Credit amounts Example 1: Suppose that a VN firm exports $2,000 of goods to be paid for in months Credit (+) Good exports (Transaction that give rise to a receipt from abroad ) Debit (-) +200 0$ Financial inflow (Receipts from exports or increase in claims on foreigners or an increase in VN’s asset abroad ) 2000$ Example 2: Suppose that a VN resident visits Bangkok and spends $500 on hotel, meals, clothes, etc Credit (+) Debit (-) +50 Financial outflow 0$ Overseas transaction by VN resident 500 $ Structures: a, Current account (CA) * Record all the transactions relating to: ● Export and import of goods and services ● Investment income: Net earnings (dividends, interest) and compensation to employees Ex: Net earnings on US investments abroad; minus payments on foreign assets in the US ● Unilateral transfers Transfer of goods and services or financial assets Private transfer payments Governmental transfers Current account – types of balance ● Balance of trade= Export – Import * Trade balance: ● Trade surplus: EX > IM (EX - export; IM - import) ● Trade deficit: EX < IM * Income flows and payments: ● Net investment income: net income receipts from assets ● Net international compensation to employees: net compensation of employees * Unilateral transfers: ● Gifts or grants received from foreign countries - gifts or grants to foreign countries Ex: The U.S government sends $100,000 worth of food aid to a poor nation * Current Account Balance= Trade balance + Income Balance + Net Unilateral Transfer If the current account > => Current account surplus If the current account < => Current account deficit b, Capital and financial account (CFA): * Capital account: ● A country's capital account records all international capital transfers The income and expenditures are measured by the inflow and outflow of funds in the form of investments and loans A deficit shows more money is flowing out, while a surplus indicates more money is flowing in ● Along with non-financial and non-produced asset transactions, the capital account includes ● Dealings such as debt forgiveness Document continues below Discover more from: Kinh tế quốc tế TUDO123 Đại học Kinh tế Quốc dân 17 documents Go to course HỘI NHẬP KINH TẾ QUỐC TẾ - Bài tập hội nhập kinh tế quốc tế Kinh tế quốc tế None CỘNG HOÀ XÃ HỘI CHỦ NGHĨA VIỆT NAM Kinh tế quốc tế None Những yếu tố tác động đến hội nhập kinh tế quốc tế Kinh tế quốc tế None Review IE - Final Kinh tế quốc tế None Nganh-det-may-2021 20210419111842 12 11 Kinh tế quốc tế None Foreign trade policy and imports - exports Grand Duchy of Luxembourg from 2015 to 2022 and Lessons for Vietnam Kinh tế quốc tế None ● The transfer of goods and financial assets by migrants leaving or entering a country ● The transfer of ownership of fixed assets and of funds received for the sale or acquisition of fixed assets ● Gift and inheritance taxes ● Death levies, patents, copyrights, royalties ● Uninsured damage to fixed assets *Financial accounts: ● The financial account measures increases or decreases in international ownership of assets, whether they be individuals, businesses, governments, or central banks ● Include: ● Direct investment and portfolio investment assets (both short and long term) ● Financial derivatives and employee stocks options ● Other investments ● Reserve assets EX1: Fig - Calculating the Balance of Payments Net current account: £350,000 + (-£400,000) + £175,000 + (£230,000) = -£105,000 Net capital account: £45,000 Net financial account: £75,000 + (-£55,000) + £25,000 = £45,000 Balancing item: £15,000 Balance of Payments = Net Current Account + Net Financial Account + Net Capital Account + Balancing Item Balance of payments: (-£105,000) + £45,000 + £45,000 + £15,000 = EX 2: Let us take the case of country A to calculate the balance of payments based on the given information and determine whether the economy is in surplus or deficit The following information is used for the calculation: Balance of current account: ● Balance of current account = exports of goods + imports of goods + exports of services + imports of services ● = $3,50,000 + (-$4,00,000) + $1,75,000 + (-$1,95,000) ● = -$70,000 i.e current account is in deficit Balance of capital account: