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The balance of payments seen in the Australian economy
Member rating: No Rating | Words: | Submitted: Mon Sep 27 2004
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"In 1994, Australia had the highest current account deficit as a percentage of GDP of any OECD country other than Mexico, with Australia being in the Top 5 per cent of OECD countries throughout the 1990s." The balance of payments is the place where countries record their monetary transactions with the rest of the world. Transactions are either marked as a credit or a debit. Within the BOP there are three separate categories under which different transactions are categorised. These are the current account, capital account and financial account. In the current account, goods, services, income and current transfers are recorded. The balance of current account tells us if a country has a deficit or a surplus. The variables that go into calculation of current account balance are X= Exports of goods and services M= Imports of goods and services NY = Net income abroad NCT = Net transfers CAB = X-M+NY+NCT A deficit reflects an...
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