Sunday, February 08, 2009
This blog helps me to grow. My latest area of growth has been trying to understand the balance of payments. This is the data from the third quarter, 2008, release from the BEA. Net Exports = -174.1. Balance on Capital Account = 38. Net Capital Inflows = 135.1. All amounts are in billions. Here's the equation I believe represents the summary of flows: Nx = CA + FA where Nx is Net Exports (E-I); CA is the Capital Account; FA is the Financial Account (capital outflows - capital inflows). Thus, my equation becomes: -174.1 = 38 + 135.1. The difference of one billion represents rounding. During this time the USD depreciated 4%. Life is good.