Reading a Balance of Payments Statement

Balance of payments accounting is a close cousin to GDP accounting in the field of macroeconomics. In fact, both are essential gear in the macroeconomist's toolbox. Whereas a GDP account reports a nation's output and its component parts, a balance of payments (BOP) statement provides a record of the country's cross-border transactions. As in a GDP account, all of the figures that appear in a BOP statement are flows, indicating the value of exports or imports, income receipts or payments, or new foreign borrowing or lending that have occurred over a particular period of time—typically a year. This chapter presents a primer on BOP accounting and the best strategies for reading and interpreting ...

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