Capital flight immigrants

1, Marshall-Lerner adjustment: Only when the absolute value of the sum of a country's import demand elasticity and foreign demand elasticity is greater than 1, currency depreciation can improve the balance of payments.

2.j-curve effect: the influence of exchange rate on the balance of payments must be through price changes, but there is a time lag between them. In this way, the improvement of the balance of payments by exchange rate changes is first in the opposite direction, and only after a considerable period of time will it be in the positive direction.

3. The effect of exchange rate changes is also influenced by exchange psychological effect.

Extended data:

Balance of payments account relationship:

In principle, the sum of current account balance and financial account balance is equal to zero. In fact, measurement problems make it impossible to establish this relationship accurately. Adjustments to measurement errors and statistical inconsistencies are reported in the financial account section of the balance of payments account.

In 2009, this adjustment was equivalent to $6,543.8+$062.5 billion (capital inflow). Many analysts believe that the huge statistical inconsistency of a country's balance of payments reflects the secret capital flow related to capital flight caused by illegal activities, tax avoidance or political risks.

In a word, international trade and financial transactions affect the current account and financial account in the balance of payments. In order to settle the international transactions of a country's balance of payments, the country's central bank and foreign central banks engage in official reserve transactions that will affect the base currency.

The capital account is the third and less important part of the balance of payments. There are relatively few transactions recorded in the capital account, such as debt relief, immigration (including goods and financial assets carried by people when entering or leaving the country) and the sale of unproductive and non-financial assets. Unproductive and non-financial assets are copyrights, patents, trademarks or natural resource development rights.

The definitions of financial account and capital account are often misunderstood, because the capital account before 1999 recorded all the transactions now included in financial account and capital account. In other words, capital account transactions have changed from a very important part of the balance of payments to a relatively unimportant part. Because the balance of the so-called capital account is so small now, we merge it with the financial account here for simplicity.