【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.