Chapter II. The Home Economy

1978 ◽  
Vol 84 ◽  
pp. 22-34
Keyword(s):  
Exchange Rate ◽  
Current Account ◽  
The State ◽  
Recent Past ◽  
Current Account Surplus ◽  
State Of The Economy ◽  
The Exchange Rate ◽  
External Account

The state of the economy in 1977 was described in Chapter I. In the first quarter of this year, there have been two connected developments which have significantly altered the picture of the very recent past and the immediate future which we presented in the February Review. The first is that the current balance on external account in the first quarter is now estimated to have been in deficit by over £200 million compared with the surplus of some £500 million which we expected in February. This represented a massive deterioration—of nearly £600 million—from the last quarter of 1977. The second is that, probably in consequence, the exchange rate fell sharply during the quarter, and ended April (in IMF weighted terms) at 62.5, or roughly the level ruling before last autumn's sharp appreciation. In February, on the basis of the forecast current account surplus, we had expected the rate to appreciate a little further in early 1978.

Chinese Revaluation and Emerging Market Prospects

2010 ◽  
Vol 212 ◽  
pp. F15-F17
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Current Account ◽  
Global Economy ◽  
Emerging Market ◽  
Current Account Surplus ◽  
Developed Economies ◽  
Bric Countries ◽  
The Us ◽  
The Exchange Rate

While the financial crisis of 2008 caused deep recession in most of the world's developed economies, many of the largest emerging markets weathered the financial storm comparatively well. China remains a vital source of global demand, while India is also gaining an increasing weight in the global economy. China has differed from India and Brazil in that this growth has been associated with a significant current account surplus, and this has been a major issue, particularly in discussion with the US. The Russian current account surplus has been associated with its role as an oil producer. In this section we first compare economic performance prior to and during the financial turmoil among the so-called BRIC countries (Brazil, Russia, India and China) which constitute the world's largest emerging markets. We then discuss the Chinese current account surplus and policies that might be adopted to reduce it. These involve the expansion of demand in China, along with an appreciation of the exchange rate. However, there is no real long-term improvement of global imbalances if China just repegs the exchange rate at a higher level.

Chapter I. The Home Economy

1976 ◽  
Vol 77 ◽  
pp. 7-32
Keyword(s):  
Exchange Rate ◽  
Interest Rates ◽  
Current Account ◽  
Current Account Deficit ◽  
Private Investment ◽  
Public And Private ◽  
Current Output ◽  
The Exchange Rate ◽  
The Current Account

The recovery in UK output is now clearly under way, against the background of a world recovery more rapid than we previously anticipated. Inflation has come down from 25 per cent to just below 15 per cent (both on a year earlier and on a quarterly basis). The current account deficit, after a low first quarter, appears to have worsened somewhat and is running at an annual rate of over £2 billion per annum. Looking over the next eighteen months, we can see a continuation of the current output recovery but, because of the drop in the exchange rate, inflation on a year earlier seems unlikely to fall below 10 per cent, in spite of our assumption that the next wages policy is not formally broken. The current account deficit should start to fall from early 1977; this improvement could be sufficient, on the assumption that monetary growth is held down by higher interest rates, to stabilise the exchange rate in the second half of 1977, if at a somewhat lower level than today's. Private investment should recover quite sharply in 1977, but unemployment may fall only slowly from a peak in early 1977 of about 1.3 million. This highlights the fact that this projected recovery, largely based on exports and stockbuilding, occurs in manufacturing and not also, as in 1972–3, in public and private services, which are relatively labour-intensive.

What Explains Current Account Surplus in Korea?

2018 ◽  
Vol 17 (2) ◽  
pp. 70-93
Author(s):  
Chirok Han ◽  
Kwanho Shin
Keyword(s):  
Exchange Rate ◽  
Fiscal Policy ◽  
Current Account ◽  
Current Account Balance ◽  
Budget Deficits ◽  
Current Account Surplus ◽  
Short Run ◽  
The Right ◽  
The Impact ◽  
The Current Account

Since the currency crisis in 1998, Korea has experienced continuous current account surpluses. Recently, the current account surplus increased more rapidly—amounting to 7.7 percent of GDP in 2015. In this paper, we investigate the underlying reasons for the widening of Korea's current account surpluses. We find that the upward trend in Korea's current account surpluses is largely explained by its demographical changes. Other economic variables are only helpful when explaining short run fluctuations in current account balances. Moreover, we show that Korea's current account surplus is expected to disappear by 2042 as it becomes one of the most aged economies in the world. Demographic changes are so powerful that they explain, quite successfully, the current account balance trends of other economies with highly aged populations such as Japan, Germany, Italy, Finland, and Greece. When we add the real exchange rate as an additional explanatory variable, it is statistically significant with the right sign, but the magnitude explained by it is quite limited. For example, to reduce the current account surplus by 1 percentage point, a 12 percent depreciation is needed. If Korea's current exchange rate is undervalued 4 to 12 percent less than the level consistent with fundamentals, it is impossible to reduce Korea's current account surplus to a reasonable level by adjusting the exchange rate alone. Another way to reduce current account surplus is to expand fiscal policies. We find, however, that the impact of fiscal adjustments in reducing current account surplus is even more limited. According to our estimates, reducing the current account surplus by 1 percentage point requires an increase in budget deficits (as a ratio to GDP) of 5 to 6 percentage points. If we allow endogenous movements of exchange rate and fiscal policy, the impact of exchange rate adjustment increases by 1.6 times but that of fiscal policy decreases that it is no longer statistically significant.

scholarly journals ESTIMATION OF BALANCE OF PAYMENTS OF UKRAINE

2021 ◽  
Author(s):  
Volodymyr Tyshchenko ◽  
Olena Tyshchenko
Keyword(s):  
Current Account ◽  
The State ◽  
Balance Of Payments ◽  
Current Account Surplus ◽  
Foreign Economic Policy ◽  
Goods And Services ◽  
Financial Account ◽  
Positive Balance ◽  
Main Components ◽  
The Current Account

The article highlights the features of the formation and assessment of the balance of payments in Ukraine. The balance of payments of Ukraine is a functional macroeconomic model that reflects all transactions that are carried out between the subjects of the national economy and the subjects of the economies of other countries of the world. This model allows you to develop and implement a sound foreign economic policy of Ukraine, analyze the state of commodity and financial markets, conduct scientific research of economic processes in the state, etc. Ukraine is actively implementing the methodology of balance of payments formation according to the recommendations of the International Monetary Fund. Ukraine's balance of payments by main components is grouped into two accounts: "capital and financial transactions" and "current transactions": capital transactions cover all transactions related to the receipt or payment of capital transfers and the acquisition or sale of property rights and non-financial assets; current transactions include all transactions between residents and non-residents on real values, as well as transactions on the free provision or receipt of valuables for current use. Like any other "balance of payments" consists of receipts and payments. It is active (surplus) when revenues are greater than payments and passive (deficit) when payments are greater than revenues. Based on the assessment of the balance of payments of Ukraine for 2020, certain conclusions can be drawn: stable external demand for food softened the drop in exports of goods from Ukraine during the COVID-19 pandemic, and the increase in prices contributed to its growth at the end of 2020; despite a slight recovery in domestic demand in the IV quarters of 2020, imports of goods to Ukraine by the results of 2020 decreased significantly; the current account surplus in Ukraine in 2020 was provided by a significant positive balance of trade in services and a record surplus of the primary income account; capital outflow from Ukraine on the financial account stopped at the end of 2020 due to the optimism of investors; despite the crisis and significant payments on external debt, Ukraine's gross reserves increased in 2020, and the financial crisis once again confirmed the importance of both international support and a balanced macroeconomic policy. The current account surplus in Ukraine in 2020 reached one of the largest levels in the history of Ukraine, it was formed due to a significant decrease in imports of goods and services, a reduction in payments on primary income and the relative stability of exports of goods and remittances. The article proposes recommendations for improving approaches to the formation of the balance of payments in Ukraine using certain methods when regulating the balance of payments of the state.

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