ECON 314 Lecture Notes - Lecture 6: Capital Account, Special Drawing Rights, Anathema
24 Jun 2019
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Balance of payments, debt, financial crisis, and stabilization policies . We need to understand the challenges countries face in terms of balance of payment problems. Also, we should understand the evolution of debt over time, esp. in developing countries. Finally, we need to understand how bop problems can lead to financial crisis. It is a summary of all economic transactions between the residents of a country and the rest of the world during a given period of time. A bop amount is divided into current account and capital account. The current account is made up of trade in goods and trade in services and unrequited transfers. The capital account is made up of transfers in financial assets (private capital, foreign direct investment, etc) Amortization: refers to spreading payments over multiple periods. It also refers to allocating the cost of intangible an asset over a period of time. There are several measures developing countries can take to mitigate bop deficits:
