Balance of Payments
Definition: The balance of payments is a simple measure of the payments in financial
capital that flow from one nation to another. If more money flows in than out, one has
a positive balance of payments - if more flows out than in, one has then a negative
balance. The money flowing over the border is like other money paying for goods,
commodities, real estate, services, securities.
It's usually separated into:
• Current Account. Goods and services.
• Financial Account. Financial assets. (Stocks, Bonds, Foreign Direct
• Capital Account. Non-financial assets
Balance of Trade
Definition: Balance of trade figures are the sum of the money gained by a given
economy by selling exports, minus the cost of buying imports. They form part of the
balance of payments, which also includes other transactions such as international
investment. The figures are usually split into visible and invisible balance figures. The
visible balance represents the physical goods, and invisible represents other forms of
trade, e.g. the service economy.
A positive balance of trade is known as a trade surplus and consists of exporting
more (in financial capital terms) than one imports. A negative balance of trade is
known as a trade deficit and consists of importing more than one exports. Neither is
necessarily dangerous in modern economies, although large trade surpluses or trade
deficits may sometimes be a sign of other economic problems.
If the balance of trade is positive, then the economy has received more money than it
has spent. This may appear to be a good thing but may not always be so.
Beige Book Fed Survey
Definition: Officially known as the Survey on Current Economic Conditions, the
Beige Book, is published eight times per year by a Federal Reserve Bank, containing