Balance of Payments Continued in Economics from HelpWithAssignment.com

For examining the factors that affect international trade and lending first requires an understanding of the basics of balance of payments accounting. The Balance of Payments accounts, which are a part of the national income accounts are the record of the country’s international transactions.

When we examine the accounts, we can see that the current account measures a country’s trade in currently produced goods and services, along with unilateral transfers between countries. We can divide the current account into three separate components, (1) net export of goods and services, (2) net income from abroad and (3) net unilateral transfers.

Net Exports of Goods and Services: Net exports, NX or exports minus imports, as part of the expenditure approach to measuring GDP. Net exports are often broken into two categories: merchandise (goods) and services.

Merchandise consists of currently produced goods, such as American soy-beans, French perfume, Brazilian coffee and Japanese cars. When an American buys a Japanese car for example, the transaction is recorded as a merchandise import for the United States (a debit item for the United States, because funds flow out of the United States to pay for the car) and a merchandise export for Japan (a credit item for Japan because funds flow into Japan to pay for the car). The difference is called “merchandise trade balance”, or simply the trade balance.
Net Income from abroad: Net Income from abroad equals income from abroad minus the income payments to residents of other countries. It is almost equal to net factor payments from abroad, NFP. The income receipts flowing into a country, which are credit items in the current account, consist of compensation, received from residents, working abroad, plus investment income from assets abroad. Investment income from assets abroad includes interest payments, dividends, royalties and other returns that they own in other countries. The income payments flowing out of a country, which are debit items in the current account, consist of compensation paid to foreign residents working in the country plus payments to foreign owners of assets in the country.

Net Unilateral Transfers: Unilateral transfers are payments from one country to another that do not correspond to the purchase of any good, service, or asset. Ex are official foreign aid, or a gift of money from a resident in one country to family members living in another country. When the United States makes a transfer to another country, the amount of transfer is debit item because funds flow out of the United States. A country’s net unilateral transfers equal unilateral transfers received by the country minus unilateral transfers flowing out of the country.

Current account balance: Adding all the credit items and subtracting all the debit items in the current account yields a number called the current account balance. If the current account balance is positive- with the value of credit items exceeding the value of debit items- the country has a current account surplus. If the current account balance is negative – with the value of debit items exceeding the value of credit items – the value of credit items – the country has a current account deficit.

The Capital and Financial Account

International transactions involving assets, either real, or financial are recorded in the Capital and Financial Account is a newly defined category that encompasses unilateral transfers of assets between countries, such as debt forgiveness or migrants’ transfers. The Capital Account Balance measures the net flow of assets unilaterally transferred into the country.

Most transactions involving the flow of assets into or out of a country are recorded in the Financial Account. This account was called the Capital Account. When the home country sells an asset to another country, the transaction is recorded as a financial inflow for the home country and as a credit item in the financial account of the home country. When a home country buys an asset from abroad, the transaction involves a financial outflow from the home country and is recorded as a debit item in the home country’s financial account because the funds are flowing out of the home country.

The Financial Account Balance equals the value of financial inflows (credit items) minus the value of the financial outflows (debit items). When residents of a country sell more assets to foreigners than they buy from foreigners, the financial account balance is positive, creating a financial account surplus. When residents of the home country purchase more assets from foreigners than they sell, the financial account balance is negative, creating a financial account deficit. The Capital and Financial Account Balance is the sum of the capital account balance and the financial account balance. Because the capital account balance of the United States is so small, the capital and financial account balance is almost equal to the financial account balance.

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This is in continuation with our previous article in Economics on Balance of Payments.

Using SPSS for Statistics Assignment Help from HelpWithAssignment.com

Introduction about SPSS:

SPSS is one of the computer programs, which involves Assembly language the second level, general purpose of C language is the third level and the fourth level refers to program developed for specific purpose or Domain such as, SQL and SPSS (FOLDOC). The syntax of 4^th level language is removed from the instructions executed by the computer and there are easy to use because of their syntax which is, often a resemble statements in human language. It is not necessary to be a SPSS Programmer to know what the program will do.

For Example:

GET FILE = ‘data.sav’ SORT CASES by id. FREQUENCES VARIABLE = age sex race.

History of SPSS:

SPSS was developed in late 1960’s by Norman H. Nie, C. Hadlai Hull and Dale H. Brent. Their purpose was to develop a software system based on the ideas of using statistics to turn raw data into information which is essential to ‘decision making’. SPSS is a statistical analysis package which was produced and sold by multinational companies. Earlier SPSS initials stood for Statistical Package for Social Science, where as today the market for SPSS has become much broader, now simply the name is used for Product and Company and not an acronym.

Development of SPSS:

Many Statistical computations involve sequences of simple arithmetic operations repeated over number of times. For example, the computation of a common statistics such as, Standard deviation is as follows:

· Determine the number of cases;

· Compute the sum of all observed values;

· Divide this sum by number of cases; as this gives the mean;

· For each case, compute the observed value minus mean;

· Compute the squares of these differences;

· Determine the sum of all squares;

· Divide this sum by number of observations minus 1;

· Find the root of the division result;

This is a useful exercise to perform computation by hand once or twice, to get same feel for statistics. But doing the arithmetic in situation involving a hundreds of cases would be a terrifying job.

The use of SPSS in Statistical research:

The research process: Many Scientists devised all sorts of schemes for better structuring the process of statistical research. A project starts with the formulation of the problem from which one or more testable hypothesis is derived. In order to test the hypothesis of has to collect the data which is subjected to Statistical Analysis.

1. Designing the Questionnaire: After defining the issue on which the field study provides, a questionnaire is developed and conducted. The module data entry enables to present question and answers are in a well-organized form. Data entry can be automatically checked while entered. Skip questions that are not relevant for respondent and, where needed, recode the data.

2. Creating the data: SPSS can import data files created with various database (for eg. Access) spreadsheet packages.

3. Checking the data: After the data has been entered or converted has to be checked. Using the module data entry has the option to automatically check the data during the input process.

4. Transferring the data: This is only needed when not all the original data are to be used in the analysis. Transforming may involve the following operations:

(a) Variables: Transforming variables are grouping values into categories or computing the new variables.

(b) Cases: Transforming the cases involves selecting a group of cases or sorting the data.

(c) Entire data File: Transforming the entire data file means merging multiple data files or transposing a data file.

5. Analysis of data: This is the fifth step in the research process is performed by the actual statistical analysis. As, SPSS consists of a base module plus a number of add-on modules. This analytical techniques detailed can be categorized into the following six groups:

1. Describing variables: This analysis helps the researcher to understand the nature of data, which is useful for determining the subsequent analysis. A variable may be described in terms of the following:

(a) The Frequency of each value: The frequency of each value, determining the frequencies of values is nothing more than counting their occurrence. The frequencies can be summarized in a table for which SPSS has the Frequencies command.

(b) The central tendency: The central tendency refers to a average group of cases. The following statistics are used:

1. The mode: The value with the highest frequency is used for nominal variables in particular.

2. The median: The value corresponding to the middle most case when cases are sorted in ascending or descending order, these are used for ordinal variable in particular.

3. The mean: The sum of all cases divided by number of cases, these are used for interval variables and ratio variables in particular.

(c) The dispersion(the extent of variation)

(d) The fit with a theoretical distribution

(e) They tend in the data (time series)

6. Describing group of cases: To describe the group of cases one can depend on the measurement level of the variable. One of the following technique is applied:

· A cross table contains information on the number or percentage of cases in the various groups. Cross tables are used mainly for nominal and ordinal variables.

· For interval variables or the ratio variables the means command is used to request the statistics for each group such as the mean, the dispersion and the number of cases.

Testing the differences between independent groups:

SPSS can do several tests to determine whether independent groups differ significantly from each other. It is customary to distinguish between situations with two groups and three or more groups.

Testing differences between related groups:

Sometimes the cases in the different groups are not independent, but in some way related to each other.

Determining the relationship between two variables:

To use determining the two variables as follows:

· A cross table for nominal and ordinal variable, requested with the cross table command.

· A scatter plot in which one variable is plotted horizontal axis and other one on the vertical axis. Scatter plots are made with the Graphs Chart Builder command.

The extent to which two variables are related can also be expressed in the form of a statistic.

For more details you can visit our website at http://www.helpwithassignment.com/statistics-assignment-help and http://www.helpwiththesis.com

This article is in continuation with our previous articles on Statistics which include Hypothesis Testing, Regression, Correlation, SPSS Statistics Help

Balance of Payments in Economics from HelpWithAssignemnt.com

The Balance of Payments Accounts, which are a part of the country’s national income accounts, are the country’s international transactions. The balance of payments contains the information about how the balance of payments accounts are constructed.

Modern economies have become open economies with virtually no exceptions. This means that they engage in international trade of goods and services and in international borrowing and lending. Economic openness is of tremendous benefit to the average person. Because the United States is an open economy, US consumer can enjoy products from around the world and US businesses can find new markets for their products abroad. Similarly, the internationalization of financial markets means that US savers have the opportunity to purchase German government bonds or shares in Taiwanese companies as well as domestic assets and US firms that want to finance investment projects can borrow in London or Tokyo as well as New York.

The ability of an open economy to spend more than it produces is both an opportunity and a potential problem. For ex: by borrowing abroad, the United States was able to finance a large excess of imports over exports during the 1980s and 1990s. As a result, Americans enjoyed higher levels of consumption, investment and government purchases than they could have otherwise. At the same time, however, they incurred foreign debts that may be a future burden to the US economy. Similarly, by borrowing heavily from abroad from abroad during 1970s, some less developed countries were able to avoid large reductions in domestic spending even though the two oil price shocks of the decade caused sharp declines in their output. During the 1980s however, many less developed countries were unable to cope with the burden of their foreign debts – a situation that became known as the LDC debt crisis – and perhaps as a result suffered severely reduced economic growth.

Why do countries sometimes borrow abroad to pay for an excess of imports over exports but at other times export more than they import and lend the difference to other countries? Why doesn’t each country just balance its books and import as much as it exports each year? The fundamental determinants of a country’s trade position are the country’s saving and investment decisions. To explore how desired national saving and desired investment help determine patterns of international trade and lending, we can extend the ideas of market equilibrium, to include a foreign sector. We know that unlike the situation in a closed economy, in an open economy desired national saving and desired investments don’t have to be equal. Instead, when a country’s desired national savings exceeds its desired investment, the country will be a lender in the international capital market and will have a current surplus. Similarly, when a country’s desired national saving is less than its desired investment, the country will be an international borrower and will have a current account deficit.

One can observe through these accounts that some of the numbers are positive and some numbers are negative. To sort out which international transactions are entered with a plus sign and which are entered with a minus sign, some principles are followed. Any transaction that involves a flow of funds into a country is a credit item and is entered with a plus sign and any transaction which involves the flow of funds out of that country is a debit item and therefore entered with a minus sign.

CURRENT ACCOUNT

Net Exports of goods and services (NX)			-164.3
Exports of goods and services		933.9
Goods	670.2
Services	263.7
Import of Goods and Services		-1098.2
Goods	-917.2
Services	-181.0
Net Income from Abroad			-12.2
Income receipts from abroad		258.3
Income payments to residents of other countries		-270.5
Net Unilateral transfers			44.1
Current Account Balance (CA)					-220.6

CAPITAL AND FINANCIAL ACCOUNT

Capital Account
Net Capital account transactions			0.6
Financial Account
Net Financial flows			209..8
Increase in US owned assets abroad		-292.8
US official reserve assets	-6.8
Other foreign assets	-286.0
Increase in foreign owned assets in US		502.6
Foreign official assets	-21.7
Other foreign assets	524.3
Capital and Financial Account Balance				210.4
Statistical Discrepancy				10.1
Balance on goods (merchandise trade balance)				-247.0
Balance on goods and services				-164.3
Balance on goods, services and Income				-176.5
Official settlements balance =
Increase in US official reserve assets minus increase in foreign official assets = 6.8 –(-21.7)				28.5

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This article is in continuation with our previous articles on Economics which include Inflation, Business Cycles, Solow's Growth Model, Phillips Curve, Economic Development & Growth