Transcript National income accounting

Section III overview





From international Micro economy to open-Macro
economy
About macro economy target : price, growth,
employment, and balance of payments.
The core property of open-Macro economic is
how an economy can get the equilibrium of
internal- and external
What should we learn from section III?_ an
integrated model of exchange rate and output
determination
This section comprises of 6 chapters, namely 12-17
1
Chapter 12 National Income Accounting and
the Balance of Payments
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
Introduction
The National Income Accounts
National Income Accounting for an
Open Economy
The Balance of Payment Accounts
Summary
2
Introduction

Microeconomics


It studies the effective use of scarce resources
from the perspective of individual firms and
consumers.
Macroeconomics


It studies how economies’ overall levels of
employment, production, and growth are
determined.
It emphasizes four aspects of economic life:




Unemployment
Saving
Trade imbalances
Money and the price level
3
Introduction


The national income accounts and the
balance of payments accounts are essential
tools for studying the macroeconomics of
open, interdependent economies.
National income accounting


Records all the expenditures that contribute to a
country’s income and output
Balance of payments accounting

Helps us keep track of both changes in a
country’s in’debtedness to foreigners and the
fortunes of its export- and import-competing
industries.it also show the connection between
foreign transactions and national money supplies.
4
12.1 The National Income Accounts

Gross national product (GNP)国民生
产总值(P209)



The value of all final goods and services
produced by a country’s factors of production
and sold on the market in a given time period
It is the basic measure of a country’s output.
Real and nominal GNP with GNP price
inflator
5

GNP is calculated by adding up the market
value of all expenditures on final output:

Consumption


Investment


The amount put aside by private firms to build new
plant and equipment for future production
Government purchases


The amount consumed by private domestic residents
The amount used by the government
Current account balance

The amount of net exports of goods and services to
foreigners
6
The National Income Accounts2000,2003
7
u.s. GDP 2008
70000
60000
57058.4
50000
40227.3
40000
30000
20000
11531.1
10000
7983
0
GDP
-10000
C
I
NET EXPORT
-2683.1
G
8
U.S. GDP
9
中国GDP（支出法，2006）
GDP
Government
consumption
C
Gross fixed
capital formation
Increase in
stocks
Net exports of
goods and
services
Statistical
discrepancyh
1989
1699.2
881.3
235.2
441.9
191.3
-18.6
-31.9
1990
1866.8
945.1
264.0
482.8
191.9
51.0
-68.0
1991
2178.2
1073.1
336.1
607.0
179.8
61.8
-79.6
1992
2692.3
1300.0
420.3
851.4
157.3
27.6
-64.2
1993
3533.4
1641.2
548.8
1330.9
240.9
-68.0
-160.4
1994
4819.8
2184.4
739.8
1731.3
302.8
63.4
-202.0
1995
6079.4
2837.0
837.9
2088.5
458.5
99.9
-242.3
1996
7117.7
3395.6
996.4
2404.8
473.7
145.9
-298.7
1997
7897.3
3692.2
1121.9
2596.5
400.3
355.0
-268.5
1998
8440.2
3922.9
1235.9
2856.9
274.5
362.9
-212.9
1999
8967.7
4192.0
1371.7
3052.7
242.4
237.6
-128.7
2000
9921.5
4585.5
1566.1
3384.4
99.8
239.0
46.6
2001
10965.5
4921.3
1766.5
3775.5
201.5
232.5
68.3
2002
12033.3
5257.1
1912.0
4363.2
193.3
309.4
-1.8
2003
13582.3
5683.4
2061.5
5349.1
247.2
298.6
-57.6
2004
15987.8
6383.4
2319.9
6511.8
405.1
407.9
-40.2
2005
18386.8
7090.6
2601.2
7746.4
209.5
1022.3
-283.3
2006
20940.7
8015.7
3016.7
9028.2
381.7
1607.6
10
-1109.1
中国GDP（支出法，1989-2006）
60.0
50.0
40.0
30.0
20.0
10.0
0.0
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
-10.0
C/GDP
G/GDP
I/GDP
CA/GDP
11
The National Income Accounts

National Product and National Income

National Income


It is earned over a period by its factors of
production.
It must equal the GNP a country generates
over some period of time.

One person’s spending is another’s income (i.e.,
total spending must equal total income).
12
The National Income Accounts

Capital Depreciation, International Transfers, and
Indirect Business Taxes
 Adjustments to the definition of GNP:

Depreciation of capital



Net unilateral transfers of income



It reduces the income of capital owners.
It must be subtracted from GNP (to get the net national product).
They are part of a country’s income but are not part of its
product.
They must be added to the net national product.
Indirect business taxes


They are sales taxes.
They must be subtracted from GNP.
13
The National Income Accounts

Gross Domestic Product (GDP)



It measures the volume of production
within a country’s borders.
It equals GNP minus net receipts of factor
income from the rest of the world.
It does not correct for the portion of
countries’ production carried out using
services provided by foreign-owned capital.
14
12.2 National Income Accounting
for an Open Economy

Consumption


Investment


The portion of GNP purchased by the
private sector to fulfill current wants
The part of output used by private firms to
produce future output
Government Purchases

Any goods and services purchased by
federal, state, or local governments
15
National Income Accounting
for an Open Economy

The National Income Identity for an Open
Economy

It is the sum of domestic and foreign expenditure on
the goods and services produced by domestic factors
of production:
Y = C + I + G + EX – IM
(12-1)
where:







Y is GNP
C is consumption
I is investment
G is government purchases
EX is exports
IM is imports
In a closed economy, EX = IM = 0.The National
16
China`s real GDP and components
17
National Income Accounting
for an Open Economy

The Current Account and Foreign
Indebtedness

Current account (CA) balance




The difference between exports of goods and
services and imports of goods and services (CA =
EX – IM)
A country has a CA surplus when its CA > 0.
A country has a CA deficit when its CA < 0.
CA measures the size and direction of international
borrowing.

A country’s current account balance equals the change
in its net foreign wealth.
18
National Income Accounting
for an Open Economy

CA balance is equal to the difference between
national income and domestic residents’
spending:
Y – (C+ I + G) = CA


CA balance is goods production less domestic
demand.
CA balance is the excess supply of domestic
financing.
19
Figure 12-2: The U.S. Current Account and Net Foreign Wealth Position,
1977-2003
20
21
US Current Account As a Percentage of GDP(1980-2006)
1
0
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
-1
-2
-3
-4
-5
-6
-7
-8
CA/GDP
22
美国经常项目余额（1980-2006）
100.000
0.000
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
-100.000
-200.000
-300.000
-400.000
-500.000
-600.000
-700.000
-800.000
-900.000
CA
23
China Current Account and Financial Account
As a Percentage of GDP(1982-2007)
24
中国经常项目余额(1982-2006)
数据来源：WWW.IMF.ORG
25000.000
20000.000
15000.000
10000.000
5000.000
0.000
1982 1983 1984 1985
1986 1987 1988 1989
1990 1991 1992 1993
1994 1995 1996 1997 1998
1999 2000 2001 2002
2003 2004 2005 2006
25
26
27
National Income Accounting
for an Open Economy

Saving and the Current Account

National saving (S)


The portion of output, Y, that is not devoted to
household consumption, C, or government
purchases, G.
It always equals investment in a closed economy.



A closed economy can save only by building up its capital
stock (S = I).
An open economy can save either by building up its capital
stock or by acquiring foreign wealth (S = I + CA).
A country’s CA surplus is referred to as its net
foreign investment.
28
National Income Accounting
for an Open Economy

Private and Government Saving

Private saving (Sp)

The part of disposable income that is saved rather
than consumed
Sp = I + CA – Sg = I + CA – (T – G) = I + CA +
(G – T) (12-2)



T is the government's “income” (its net tax revenue)
Sg is government savings (T-G)
Government budget deficit (G – T)

It measures the extent to which the government is
borrowing to finance its expenditures.
29
Inverse Relationship Between
Public Saving and Current Account?
US current account and public saving relative to GDP,
1960-2004
Percent of GDP
4%
2%
0%
-2%
-4%
-6%
-8%
1960
1965
1970
1975
1980
current account
1985
1990
1995
2000
public saving
30
财政赤字与经常项目(中国数据1990-2006)
25000
20000
15000
10000
5000
0
1990
-5000
1991
1992
1993
1994
1995
1996
1997
CA
1998
1999
2000
G-T
2001
2002
2003
2004
2005
2006
31
The Balance of Payments
Accounts

A country’s balance of payments is a summary statement
in which all the transactions of the residents of this
country with the residents of all others are recorded
during a particular period of time


Every international transaction automatically enters the
balance of payments twice: once as a credit (+) and
once as a debit (-)_ Double –entry
The rules of entry : Any transaction which induce the
increase of foreign exchange supply and debt , the
decrease of claim enters credit(+) ; Any transaction
which induce the increase of demand for foreign
exchange and claim, the decrease of debt enters
debit(-).
32
规则一
资产增加——记借方
资产减少——记贷方
规则二
负债增加——记贷方
规则三
资金来源——记贷方
负债减少——记借方
资金运用——记借方
The Balance of Payments
Accounts

Three types of international transactions are recorded in the
balance of payments:
 CA shows the transaction of real economy, namely: Exports
or imports of goods or services, income and unilateral
transfers of goods or services
 Financial account shows up the international settlements
and transactions of financial assets; Any transaction of
international financial assets with central bank
enters the international reserve account
 Unilateral transfers of wealth between countries are
recorded in the capital account, when they are
involved in the transfers of financial assets; They are
recorded in the CA, when they are involved in the
transfers of goods or service
34
The Balance of Payments
Accounts

Examples of Paired Transactions

A U.S. citizen buys a $1000 typewriter from
an Italian company, and the Italian company
deposits the $1000 in its account at Citibank
in New York.


That is, the U.S. trades assets for goods.
This transaction creates the following two
offsetting entries in the U.S. balance of payments:


It enters the U.S. CA with a negative sign (-$1000).
(induces the increase of demand for foreign exchange)
It shows up as a $1000 credit in the U.S. financial
account. (induces the increase of debt to nonresidents)
35

2)During your travels in France you pay $200
for a fine dinner at the Restaurant de
1’Escargot d’Or.Lacking cash,you place the
charge on your Visa credit card.
36
The Balance of Payments
Accounts

A U.S. citizen buys a $95 newly issued share
of stock in the United Kingdom oil giant British
Petroleum (BP) by using a check drawn on his
stockbroker money market account. BP
deposits the $95 in its own U.S. bank account
at Second Bank of Chicago.


That is, the U.S. trades assets for assets.
This transaction creates the following two
offsetting entries in the U.S. balance of payments:


It enters the U.S. financial account with a negative sign
(-$95).
It shows up as a $95 credit in the U.S. financial account.
37

U.S. banks forgive $5000 in debt owed to
them by the government of the imaginary
country of Bygonia.
38
一级账户
一、经常账户
二级账户 三级账户
贸易收支
贷方（+）
本国收入外汇
差额
出口
进口
服务
借方（-）
本国支出外汇
1000
-1000
出口
进口
200
-200
收益
职工报酬
经常转移
1200
-1200
资本账户
5000
-5000
金融账户
95
1000+200+95
+5000
6200
5095
6295
1200
6295
6295
0
经常账户合计
二、资本与金融账
户
资本与金融账户合
计
三、储备资产
四、错误与遗漏
总计
39
案例
太平洋中有一个岛国下沙尼亚，一年中发
生了6笔对外经济交易
（1）
一下沙尼亚商人出口200万美元的椰子油到美国，
将收到的货款存入下沙尼亚在美国的银行账户
（2）一下沙尼亚居民到外国旅游花销30万美元，
这笔费用从该居民的海外存款中扣除
（3）
外商以价值1000万美元的设备投入下沙尼亚，兴办
合资企业。
（4）
下沙尼亚政府动用外汇库存40万美元向外国提供
无偿援助，另提供相当于60万美元的粮食药品援
助。
（5）
下沙尼亚某企业在海外投资所得利润150
万美元。其中75万美元用于当地的再投
资，，50万美元购买当地的商品运回国
内，25万美元调回国内结售给政府以换
取本国货币
45
（6）
下沙尼亚居民动用其在海外存款40万美元，
用于购买外国某公司股票
46
下沙尼亚国际收支平衡表年度记账表
一级账户
一、经常账户
二级账户 三级账户
贸易收支
出口
进口
收益
经常转移
经常账户合计
二、资本与金融账
户
借方（-）
本国支出外汇
贷方（+）
本国收入外汇
差额
100＋60
160
1000＋50＋30
-1080
1080
-920
150
职工报酬
100
－100
1180
310
100＋75＋40＝
215
30＋1000＋40
＝1070
－870
855
资本与金融账户合
计
三、储备资产
150
25
40
15
四、错误与遗漏
总计
1420
1420
0
47
The Balance of Payments
Accounts

The Fundamental Balance of Payments
Identity

Any international transaction automatically
gives rise to two offsetting entries in the
balance of payments resulting in a
fundamental identity:
Current account + financial account + capital
account = 0 (12-3)
48
The Balance of Payments Accounts
Table 12-2: U.S. Balance of Payments Accounts for 2000
(billions of dollars)
49
The Balance of Payments Accounts
Table 12-2: Continued
50
The Balance of Payments Accounts

The Current Account, Once Again

The balance of payments accounts divide
exports and imports into three categories:

Merchandise trade


Services


Exports or imports of goods
Payments for legal assistance, tourists’ expenditures, and
shipping fees
Income

International interest and dividend payments and the
earnings of domestically owned firms operating abroad
51
The Balance of Payments Accounts

The Capital Account


It records asset transfers and tends to be
small for the United States.
The Financial Account

It measures the difference between sales of
assets to foreigners and purchases of assets
located abroad.

Financial inflow (capital inflow)


A loan from the foreigners with a promise that they will
be repaid
Financial outflow (capital outflow)

A transaction involving the purchase of an asset from
52
53
The Balance of Payments Accounts

The Statistical Discrepancy

Data associated with a given transaction may
come from different sources that differ in
coverage, accuracy, and timing.



This makes the balance of payments accounts
seldom balance in practice.
Account keepers force the two sides to balance by
adding to the accounts a statistical discrepancy.
It is very difficult to allocate this discrepancy
among the current, capital, and financial accounts.
54
中国国际收支错误与遗漏账户变动概况
30000
25000
20000
百万美元
15000
10000
5000
0
-5000
-10000
-15000
-20000
-25000
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
The Balance of Payments Accounts

Official Reserve Transactions

Central bank


Official international reserves


The institution responsible for managing the
supply of money
Foreign assets held by central banks as a cushion
against national economic misfortune
Official foreign exchange intervention

Central banks often buy or sell international
reserves in private asset markets to affect
macroeconomic conditions in their economies.
56
图 中国对外收支不平衡的扩大与外汇储备的增加

57
中国案例:外汇储备如何运用?
TABLESTUB
SDRs
Reserve Position in the Fund
Foreign Exchange
Gold (National Valuation)
1980
92.
191.
2262.
571.000
1981
275.
0.
4783.
516.000
1982
214.
0.
11135.
491.000
1983
335.
176.
14476.
464.000
406.
255.
16705
435.000
483.
332.
11913.
486.000
1986
569.
370.
10514.
541.000
1987
640.
429.
15236.
629.000
1988
586.
407.
17548.
594.000
1989
540.
398.
17022.
587.000
1990
562.
430.
28594.
623.000
1991
577.
433.
42664.
634.000
1992
419.
758.
19443
610.000
1993
484.
704.
21199.
612.440
1994
539.
755.
51620.
645.570
1995
582.
1216.
73579.
659.570
1996
614.
1396.
105029.
636.630
1997
602.
2270.
139890.
600.940
1998
676.
3553.
144959.
623.830
1999
741.
2312.
154675.
607.950
2000
798.
1905.
165574.
577.780
2001
851.
2590.
212165.
3093.000
2002
998.
3723.
286407.
58
4074.000
1984
1985

The Balance of Payments Accounts

Official settlements balance (balance of
payments)


The book-keeping offset to the balance of official
reserve transactions
It is the sum of the current account balance, the capital
account balance, the nonreserve portion of the financial
account balance, and the statistical discrepancy.


Example: The U.S. balance of payments in 2000 was -$35.6
billion, that is, the balance of official reserve transactions with
its sign reversed.
A country with a negative balance of payments may
signal that it is running down its international reserve
assets or incurring debts to foreign monetary authorities.
59





Trade Balance
Current Account Balance
Basic Balance
The official settlement balance
Overall Balance
60
Relative Topics

Deficit and Surplus
why?
Effect?
How?
61
Relative Theories






Price-specie-flow mechanism
（Charpter18)
The elasticities approach（Charpter16)
Multiplier Approach
The absorption approach
Multiplier Approach
The monetary approach （Charpter17)
62
The Balance of Payments Accounts

Case Study: Is the United States
the World’s Biggest Debtor?



At the end of 1999, the United States had
a negative net foreign wealth position far
greater than that of any other single
country.
The United States is the world’s biggest
debtor.
However, the United States has the world’s
63
largest GNP.
Summary

A country’s GNP is equal to the income
received by its factors of production.


GDP is equal to GNP less net receipts of factor
income from abroad, measures the output
produced within a country’s territorial borders.
In a closed economy, GNP must be
consumed, invested, or purchased by the
government.

In an open economy, GNP equals the sum of
consumption, investment, government
purchases, and net exports of goods and
services.
64
Summary



The capital account records asset transfers
and tends to be small in the United States.
Any current account deficit must be
matched by an equal surplus in the other
two accounts of the balance of payments,
and any current account surplus by a deficit
somewhere else.
International asset transactions carried out
by central banks are included in the financial
account.
65
Summary


All transactions between a country and the
rest of the world are recorded in its balance
of payments accounts.
The current account equals the country’s net
lending to foreigners.


National saving equals domestic investment plus
the current account.
Transactions involving goods and services appear
in the current account of the balance of
payments, while international sales or purchases
66
of assets appear in the financial account.
Readings
王月溪“解读中国国际收支平衡表：结构
特征、形成动因、调整方向及政策建议”
《管理世界》2003年4期
 方文“对国际收支危机传染的比较研究”
《世界经济》2000年6期
 王一萱“资本项目国际收支危机与东南亚
金融危机”《国际金融研究》2001年10期
 杨柳勇“中国国际收支的超前结构：特征、
形成原因、变动趋势和调整方向”
《世界经济》2002年11期

67
problem

P321, 3
68