搜索
1MultinationalFinancialManagementAlanShapiro7thEditionJ.Wiley&SonsPowerPointsbyJosephF.Greco,Ph.D.CaliforniaStateUniversity,Fullerton2CHAPTER5THEBALANCEOFPAYMENTSANDINTERNATIONALLINKAGES3CHAPTEROVERVIEWI.BALANCE-OF-PAYMENTCATEGORIESII.THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITALIII.COPINGWITHCURRENTACCOUNTDEFICITS4PARTI.BALANCE-OF-PAYMENTCATEGORIESA.THEBALANCEOFPAYMENTS(B-O-P)1.PURPOSE:Measuresallfinancialandeconomictransactionsoveraspecifiedperiodoftime.5BALANCE-OF-PAYMENTCATEGORIES2.Double-entrybookkeepinga.Currencyinflows=creditsearnforeignexchangeb.Currencyoutflows=debitsexpendforeignexchange6BALANCE-OF-PAYMENTCATEGORIES3.ThreeMajorAccounts:a.Currentb.Capitalc.OfficialReserves4.CurrentAccountrecordsnetflowofgoods,services,andunilateraltransfers.7BALANCE-OF-PAYMENTCATEGORIES5.CapitalAccounta.Function:recordspublicandprivateinvestmentandlending.b.Inflows=creditsc.Outflows=debits8BALANCE-OF-PAYMENTCATEGORIES5.CapitalAccount(con’t)d.Transactionsclassifiedas1.)portfolio2.)direct3.)shortterm9BALANCE-OF-PAYMENTCATEGORIES6.OfficialReservesAccounta.Function:1.)measureschangesininternationalreservesownedbycentralbanks.2.)reflectssurplus/deficitofa.)currentaccountb.)capitalaccount10BALANCE-OF-PAYMENTCATEGORIES6.OfficialReservesAccount(con’t)b.Reservesconsistof1.)gold2.)convertiblesecurities11BALANCE-OF-PAYMENTCATEGORIES7.NetEffects:a.Sumofalltransactionsmustbezero:1.)currentaccount2.)capitalaccount3.)officialreserves12BALANCE-OF-PAYMENTCATEGORIES8.TheBalance-of-paymentmeasuresa.SomeDefinitions:1.)BasicBalancea.)consistsofcurrentaccountandlong-termcapitalflows.13BALANCE-OF-PAYMENTCATEGORIES1.)BasicBalance(con’t)b.)emphasizeslong-termtrends.14BALANCE-OF-PAYMENTCATEGORIES1.)BasicBalance(con’t)c.)excludesshort-termcapitalflowsthatheavilydependontemporaryfactors.15BALANCE-OF-PAYMENTCATEGORIES2.)NetLiquidityBalance:measuresthechangeinprivatedomesticborrowingorlendingrequiretokeeppaymentsequalwithoutadjustingofficialreserves.16BALANCE-OF-PAYMENTCATEGORIES3.)OfficialReserveTransactionsBalance-measuresadjustmentsneededbyofficialreserves.17PARTII.THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITALII.LINKSFROMINTERNATIONALTODOMESTICFLOWSA.GlobalLinkagessetofbasicmacroeconomicidentitieswhichlink:domesticspendingandproductiontocurrentandcapitalaccounts18THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITALB.DomesticSavingsandInvestmentandtheCapitalAccount1.NationalIncomeAccountinga.NationalIncome(NI)iseitherspent(C)orsaved(S)NI=C+S(5.1)19THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITALb.Nationalspending(NS)isdividedintopersonalspending(C)andinvestment(I)NS=C+I(5.2)20THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITALc.Subtracting(4.2)-(4.1)NI-NS=S-I(5.3)IfNINS,SIwhichimpliesthatsurpluscapitalspentoverseas.21THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITALd.Inafreely-floatingsystem,excesssaving=thecapitalaccountbalancee.Implications:1.Anationwhichproducesmorethanitspendswillsavemorethanitinvestsdomesticallywithanetcapitaloutflowproducingacapitalaccountdeficit.22THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITAL2.Anationwhichspendsmorethanitproduceshasanetcapitalinflowproducingacapitalaccountsurplus.3.Ahealthyeconomywilltendtorunacurrentaccountdeficit.23THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITALC.THELINKBETWEENTHECURRENTANDCAPITALACCOUNTS1.BeginningidentityNI-NS=X-M(5.4)whereX=exportsM=importsX-M=currentaccountbalance(CA)24THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITAL2.Combining(5.3)+(5.4)S-I=X-M(5.5)3.IfS-I=NetForeignInvestment(NFI)NFI=X-M(5.6)25THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITAL4.Implications:a.IfCAisinsurplus,thenationmustbeanetexporterofcapital.b.IfCAisadeficit,thenationisamajorcapitalimporter.c.WhenNSNI,theexcessmustbeacquiredthroughforeigntrade.26THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITALd.SolutionsforImprovingCAdeficits:1.)Raisenationalincome(output)relativetodomesticinvestment(I).2.)Increase(S)relativetodomesticinvestment(I).27THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITALD.GOVERNMENTBUDGETSANDCURRENTACCOUNTDEFICITS1.CURRENTACCOUNTBALANCECA=SavingSurplus-Gov’tbudgetdeficit28THEINTERNATIONALFLOWOFGOODS,SERVICES,ANDCAPITAL2.CADeficitmeansthenationisnotsavingenoughtofinance(I)andthedeficit.3.CASurplusmeansthenationissavingmorethanneededtofinanceits(I)anddeficit.29PARTIII.COPINGWITHTHECURRENTACCOUNTDEFICITI.POSSIBLESOLUTIONSUNLIKELYTOWORK:A.CurrencyDepreciationB.Protectionism30COPINGWITHTHECURRENTACCOUNTDEFICITII.CURRENCYDEPRECIATIONA.U.S.Experience:Doesnotimprovethetradedeficit.31COPINGWITHTHECURRENTACCOUNTDEFICITB.Depreciationsareineffectivebecause1.Ittakestimetoaffecttrade.2.J-CurveEffectstatesthatadeclineincurrencyvaluewillinitiallyworsenthedeficitbeforeimprovement.32THEJ-CURVETIMENetchangeintradebalance0CurrencydepreciationTradebalanceinitiallydeterioratesTradebalanceimproves33COPINGWITHTHECURRENTACCOUNTDEFICITIII.PROTECTIONISMA.TradeBarriersused:1.Tariffs2.QuotasB.Results:MostlikelywillreducebothXandM.34COPINGWITHTHECURRENTACCOUNTDEFICITC.FOREIGNOWNERSHIPoneprotectionistsolutionwouldplacelimitsonoreliminat