Balance of payments/Addendum: Difference between revisions
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In principle the balance of payments can be influenced by four possible policy measures | In principle the balance of payments can be influenced by four possible policy measures | ||
* the use of domestic | * the use of domestic currency reserves; | ||
* action to alter the rate of [[inflation]]; | * action to alter the rate of [[inflation]]; | ||
* [[exchange rate]] changes ; | * [[exchange rate]] changes ; | ||
* restrictions upon domestic access to foreign exchange (''[[exchange controls]]''). | * restrictions upon domestic access to foreign exchange (''[[exchange controls]]''). | ||
Latest revision as of 07:08, 6 June 2009
Definition
According to the IMF Balance of Payments Manual[1] the balance of payments is made up of transactions involving: goods, services and income; financial claims and liabilities; and gifts classified as transfers, and comprises two main groups of accounts:
- a current account pertaining to goods and services, income, and current transfers; and
- a capital and financial account pertaining to capital transfers and assets and financial assets and liabilities.
Policy implications
In principle the balance of payments can be influenced by four possible policy measures
- the use of domestic currency reserves;
- action to alter the rate of inflation;
- exchange rate changes ;
- restrictions upon domestic access to foreign exchange (exchange controls).