Balance of payments

The balance of payments is a table of all foreign transactions in a year. The balance of payments shall be 0 or as close to zero as possible, if this is not the case, it is something wrong with the statistics.

The balance of payments are established by the central bank. The balance of payments includes the trade balance, the services balance, factor income, the transfer balance and the financial balance. The presentation below shows the contents of the balance of payments:

+ Balance of trade (export-import of goods)
+ Balance of services (export-import of services)
+ Factor income (wages and investment income)
+ Transfer balance (foreign aid, eu grants)
+ Financial balance (investments and loans)
+ Residual
= 0
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balance of payments, macro theory, economics