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IMF Financial Programming and Policies > The External Sector > Flashcards

The External Sector Flashcards

1
Q

Inter-temporal Transactions

A

How much to lend/borrow between the world and us

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2
Q

Intra-temporal Transactions

A

Where to buy/produce between the world and us

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3
Q

International trade increases ..

A

Living standards

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4
Q

Heckler-Ohlin states

A

Countries with comparative advantage should produce products that utilise it

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5
Q

Balance of Payments

A

Record of economic of flows per unit time

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6
Q

BOP items (4)

A

Goods, services, flows related to factors of production, financial asset flows

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7
Q

Exchanges vs Transfers

A

Transfers are one-sided

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8
Q

Errors + Omissions = (2)

A

Debits - Credits

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9
Q

Primary Account items (5)

A

Wages, Investment income, Interest payment, Capital sales, Taxes on G&S

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10
Q

Capital Account items (2)

A

Financial asset flows and Non-financials such as IP, Bandwidth, Property rights (intangibles)

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11
Q

Financial Account items (3)

A

Investment, Derivative and reserve assets

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12
Q

Financial Account Balance

A

Net acquisition of assets - Net incurrence of liabilities

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13
Q

A negative FAB means

A

Net Borrower from the world

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14
Q

FAB sections (3)

A

Direct; Portolio; Derivative + Other

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15
Q

Direct vs Portfolio investments

A

Direct is ownership

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16
Q

Government bonds are in which Financial Account?

A

Portfolio - Cannot take ownership of Govnt Bonds

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17
Q

BOP Balance

A

CAB + KAB - FAB + NEO = 0

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18
Q

IIP

A

International Investment Position = Assets - Liabilities

19
Q

Positive FAB … the IIP

A

improves

20
Q

Negative CAB and KAB means … so … IIP

A

spending .. deteriorates

21
Q

Exceptional Financing

A

Debt forgiveness and DSA etc.

22
Q

Trade Balance (f(Absorption))

A

Net Exports = GDP - Absorption (C+I+G)

23
Q

Trade Balance (CFA way)

A

S - I = Net Exports

24
Q

BOP key accounting notes (2)

A

Accrual (not cash) based, of residents vs non-residents

25
Q

External Assessment : SSLuR

A

Size of obligations; Stability of flows; Liquidity of assets; Rigidity of financing needs

26
Q

Implicit Interest Rate

A

Interest Payments / Average Debt Stock

27
Q

Roll over Rate

A

New Disbursements / Amortization Payments

28
Q

ST debt at remaining maturity

A

Stock + Amortization payment of LT debt

29
Q

Terms of Trade

A

Value of Exports / Value of Imports

30
Q

Absolute Purchasing Parity based on …

A

rule of one price (a burger in japan should cost the same as a burger in NY)

31
Q

Why does Absolute PPP not hold

A

Frictions of availability and tariffs

32
Q

Relative PPP relates (1) to (2)

A

Price change to inflation differentials

33
Q

Uncovered Interest Rate Parity states

A

Investing currency A at its rate a should return the same if I take currency A, convert it to dollars, and invest in the dollar rate d

34
Q

In Uncovered IRP, investors must be … because …

A

Risk Neutral … Exchange Rate of repatriation is not guaranteed

35
Q

Balassa-Samuelson states

A

Wages in non-tradeable sectors increases because of migration of labour with the tradeable sector (where wages increase with demand)

36
Q

Range of elasticity for : import quantity %chg to real output %chg (developing economies)

A

1-2

37
Q

Range of elasticity for : import quantity %chg to relative import prices % chg (developing economies)

A

0.1-0.7

38
Q

Range of elasticity for : export quantity %chg to potential output %chg (developing economies)

A

1-2

39
Q

Range of elasticity for : export quantity %chg to potential output %chg (developing economies)

A

0.5-1

40
Q

Key Reserve Indicators (3)

A

Import Coverage; M2 Coverage; ST Debt coverage

41
Q

Import Coverage “good” threshold

A

3 months

42
Q

M2 Coverage “good” threshold for floating vs fixed regimes

A

10% vs 20%

43
Q

ST Debt Coverage “good” threshold

A

Over 100% according to Greenspan-Guidotti rule

IMF Financial Programming and Policies (4 decks)

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