Chapter 3: Questions 1-4
1. See Figure 3-1, pp. 46–47
Balance on current account = -$66,400 million
Balance on nonofficial capital account = -1609 -53,253 + 88,895 = $34,033 million
Balance on the official capital account = 3,901 + 40,684 = $44,585 million => Balance on the Official Reserve Transaction Account (BOP) = -$44,585 million
2. Turkey Balance of Payments
1990 1991 1992 1993
Net Trade -9555 -7340 -8191 -14160
Current Balance (CA) -2625 258 -943 -6373
Net Capital Movements 4037 -2397 3648 8907
Net Trade = Balance on Goods and Services
Current Balance = Current Account
Net Capital Movements = Non official K acct balance
Net import of International 1412 -2139 2705 2529
Reserves = CA + Net K
Movement = ORT = BOP
Turkey’s Investment Invest income?
Current Account = Net Trade + Investment Income + net unilateral transfer payments
Assuming net unilateral transfer payments are small then Investment income is approximately CA - Net Trade.
1990 1991 1992 1993
Investment Income = +6930 7598 7248 7782
3. Mexican Balance on the Capital Account
1990 Method 1: ORT = -(Reserves and Related Items) = overall balance
= -(-2219) = 2219
Nonofficial Capital Account = ORT - CA - net errors and omissions
= 2219 - (-7117) - 890 = + $8446 million
1990 Method 2:
Nonofficial capital account = direct investment + portfolio investment + other capital
= 2548 - 5359 + 11257 = + $8446 million
1991 Method 1: ORT = -(-7972) = 7972 = overall balance
Nonofficial Capital Account = ORT - CA - net errors and omissions
= 7972 - (-13283) - 869 = + $20,386 million
1991 Method 2:
Nonofficial capital account = direct investment + portfolio investment + other capital
= 4742 + 6937 + 8707 = + $20,386 million
Mexico’s foreign reserves increased in 1991 because the ORT measures the net increase in international reserves during the particular period of time.
4.
G (p. 57) T - G (p. 64) T
1990 1047.4 -138.4 909
1991 1099.3 -196.2 903.1
1992 1131.8 -269.1 862.7