【学习笔记】International Finance 国际金融论研究 学习笔记-16 [推广有奖]

【学习笔记】International Finance 国际金融论研究 学习笔记-16

Part I

Basics ofInternational Finance --16

Ch3 --5

Balanceof Payments

Relationship between Balance of Payments and NationalIncome Accounting --3

(S –I) + (T –G) ≡ X –M ≡ BCA

1.     This shows that there is an intimaterelationship between a country’s BCA and how it finances its domesticinvestment and pays for government spending.

2.     If (S –I) < 0, then a country’s domesticsavings is insufficient to finance domestic investment.

3.     Similarly, if (T –G) < 0, then tax revenueis insufficient to cover government spending and a government budget deficitexists.

Relationship between Balance of Payments and NationalIncome Accounting --4

(S –I) + (T –G) ≡ X –M ≡ BCA

1.     When BCA < 0, government budget deficitsand/or part of domestic investment are being financed by foreign-controlledcapital.

2.     To reduce a BCA deficit, one of the followingmust occur:

        1）Fora given level of S and I, the government budget deficit

             (T–G) must be reduced.

        2）Fora given level of I and (T –G), S must be increased.

        3）Fora given level S and (T –G), I must fall.