Mind map
Balance of Payments
Map content
Balance of Payments
BOP Surplus
- caused by...
- Current Account Surplus
- ↑ (X-M)
- ↑ AD
- trigger multiplier effect
- multiplied rounds of ↑ AD and ↑ RNY
- ↑ AD near full employment
- DD-pull inflation
- ↑ AD over Keynesian range
- ↑ EG (actual growth)
- Attract FDI
- ↑ Employment
- ↑ EG (actual growth)
- ↑ AD near full employment
- multiplied rounds of ↑ AD and ↑ RNY
- trigger multiplier effect
- ↑ DD for domestic currency
- Exchange Rate Appreciation
- M become relatively cheaper
- ↓ Imported inflation
- ↓ Cost of new technology
- ↑ M of capital goods
- ↑ Productivity, move up value chain
- ↑ AS
- ↑ EG (potential growth)
- ↑ AS
- ↑ Productivity, move up value chain
- ↑ M of capital goods
- ↑ Profits when repatriated back to home country
- ↑ Expected Rate of Return
- ↑ Expected Rate of Return
- M become relatively cheaper
- Exchange Rate Appreciation
- ↑ AD
- ↑ (X-M)
- Capital and Financial Account Surplus
- ↑ FDI
- Undesirable restructuring
- Economy had not shifted to higher VA yet
- Workers lack required skills to work in booming industry
- ↑ Structural UnN
- Workers lack required skills to work in booming industry
- Economy had not shifted to higher VA yet
- ↑ DD for domestic currency
- Exchange Rate Appreciation
- X become relatively more expensive in foreign currency/ M become relatively cheaper in domestic currency
- ↓ X / Consumers switch from domestic G&S to M so Cd ↓
- ↓ AD, trigger reverse multiplier
- multiplied rounds of ↓ AD and ↓ RNY
- ↓ Employment
- ↓ EG (actual growth)
- multiplied rounds of ↓ AD and ↓ RNY
- ↓ AD, trigger reverse multiplier
- ↓ X / Consumers switch from domestic G&S to M so Cd ↓
- ↓ Imported inflation
- X become relatively more expensive in foreign currency/ M become relatively cheaper in domestic currency
- Exchange Rate Appreciation
- ↑ I
- ↑ AD
- trigger multiplier effect
- multiplied rounds of ↑ AD and ↑ RNY
- ↑ Employment
- ↑ EG (actual growth)
- multiplied rounds of ↑ AD and ↑ RNY
- trigger multiplier effect
- ↑ Capital accumulation
- ↓ Unit cost of production
- ↑ SRAS
- ↑ SRAS
- ↑ Productive capacity
- ↑ LRAS
- ↑ EG (potential growth)
- ↑ LRAS
- ↓ Unit cost of production
- ↑ AD
- Undesirable restructuring
- ↑ FDI
- Current Account Surplus
- Deficit somewhere else
- If deficit is persistent, risk BOP crisis
- ↑ Protectionism
- ↓ Trade
- ↑ Protectionism
- If deficit is persistent, risk BOP crisis
- caused by...
BOP Deficit
- caused by...
- Current Account Deficit
- ↓ (X-M)
- ↓ AD
- trigger reverse multiplier effect
- multiplied rounds of ↓ AD and ↓ RNY
- ↓ AD over Keynesian range
- ↓ EG (actual growth)
- ↓ Employment
- ↓ AD near full employment
- ↓ DD-pull inflation
- ↓ AD over Keynesian range
- multiplied rounds of ↓ AD and ↓ RNY
- trigger reverse multiplier effect
- ↓ AD
- M of capital goods
- ↑ Capital accumulation
- ↑ Productivity
- ↑ I
- ↑ AS
- ↑ EG (potential growth)
- ↑ AD
- trigger multiplier effect
- multiplied rounds of ↑ AD and ↑ RNY
- ↑ EG (actual growth)
- ↑ Employment
- multiplied rounds of ↑ AD and ↑ RNY
- trigger multiplier effect
- ↑ AS
- ↓ Unit cost of production/ ↑ Productive capacity
- ↑ AS
- ↑ EG (potential growth)
- ↑ AS
- ↑ I
- ↑ Productivity
- ↑ Capital accumulation
- ↓ (X-M)
- Capital and Financial Account Deficit
- ↑ DIA
- ↑ Future Y inflows from abroad
- ↑ Purchasing power
- ↑ C
- ↑ AD
- ↑ C
- Improve Current Account in the future
- Improve BOP
- ↑ Purchasing power
- ↑ Future Y inflows from abroad
- ↓ FDI
- ↓ I
- ↓ AD
- trigger reverse multiplier effect
- multiplied rounds of ↓ AD and ↓ RNY
- ↓ EG (actual growth)
- ↓ Employment
- multiplied rounds of ↓ AD and ↓ RNY
- trigger reverse multiplier effect
- ↓ Rate of capital accumulation
- AS ↑ at a slower rate
- ↓ Potential growth
- AS ↑ at a slower rate
- ↓ AD
- ↓ DD for domestic currency
- Exchange Rate Depreciation
- X become relatively cheaper in foreign currency/ M become relatively more expensive in domestic currency
- ↑ X / Consumers switch from M to domestic G&S so Cd ↑
- ↑ AD, trigger multiplier effect
- multiplied rounds of ↑ AD and ↑ RNY
- ↑ Employment
- ↑ EG (actual growth)
- multiplied rounds of ↑ AD and ↑ RNY
- ↑ AD, trigger multiplier effect
- ↑ X / Consumers switch from M to domestic G&S so Cd ↑
- ↑ Imported inflation
- X become relatively cheaper in foreign currency/ M become relatively more expensive in domestic currency
- Exchange Rate Depreciation
- ↓ I
- ↑ DIA
- Current Account Deficit
- Depletion of foreign reserves
- Borrowings, ↑ Foreign debt burden
- ↑ Interest payment
- ↑ Opportunity cost, ↓ M in the future
- ↓ Material SOL
- ↑ Opportunity cost, ↓ M in the future
- Need to sell domestic currency to pay back debt
- Devaluation/ Expected Devaluation
- Massive hot money outflows
- BOP further worsens
- Massive hot money outflows
- Devaluation/ Expected Devaluation
- ↑ Interest payment
- ↓ Ability to ER intervention
- ↑ Vulnerability to speculative attacks
- BOP Crisis
- ↑ Vulnerability to speculative attacks
- Borrowings, ↑ Foreign debt burden
- caused by...
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Information
- Description
- Mind Map on Balance of Payments, created by 17Y6C32 KOH HUI WEN on 11/12/2017.
- Created by
- 17Y6C32 KOH HUI WEN · Dec 2017
- Updated
- Dec 14, 2017
- Views
- 48
- Rating