Balance of payments

The balance of payments budget deficit has always been a popular topic of casual discussion at dinner parties among friends. The figures are a watched and followed closely by stockbrokers, fund managers, bonds and currency traders as well as investors. While business leaders, economists and policy makers spend the weekend debating the relevance of these newly acquired numbers on the Sunday business show. Even movie star Arnold Schwarzenegger who is running for governor of California was quoted in the Courier-Mail (30 August. 2003, p.23) saying that he was disgusted at the massive budget deficit blamed on mismanagement by politicians. Clearly the Balance of payment is very important to the citizens of the country. But is having a budget deficit really that bad?

This essay will begin by firstly explaining the composite construct of the Australian Balance OF Payments (BOP). Secondly we will compare and contrasts the United States (US) system of accounts with the Australian BOP. Thirdly...