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:
“In abnormal times like our own, when institutions are changing rapidly in several directions at once and the traditional framework of society has broken down, it becomes more and more difficult to measure any type of behavior against any other.”
—John Dos Passos (1896–1970)
“Mental health depends upon the maintenance of a balance within the personality between the basic human urges and egocentric wishes on the one hand and the demands of conscience and society on the other hand.”
—Selma H. Fraiberg (20th century)
“Let it be an alliance of two large, formidable natures, mutually beheld, mutually feared, before yet they recognize the deep identity which beneath these disparities unites them.”
—Ralph Waldo Emerson (1803–1882)