The Traditional Balance of Payments Identity
Traditional balance-of-payments accounting is that the change in the net foreign asset position equals the current account balance. In other words, if a country runs a $700 billion current account deficit, it has to borrow exactly $700 billion from abroad to finance the deficit and therefore, the country's net foreign asset position falls by $700 billion.
Read more about this topic: Net Foreign Assets
Famous quotes containing the words traditional, balance and/or identity:
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