The Capital, Current and Financial Accounts

Macro – Exchange Rates and the Balance of Payments

In this course, Dr Bruce Morley (University of Bath) explores the topic of Exchange Rates and Balance of Payments. In the first module, we look at the three separate accounts of the Balance of Payments - the Capital, Current and Financial Accounts. After this, we look at some of the determinants of the Current Account. Then, we explore some of the determinants of the exchange rate. In the fourth module, we look at some trade policies which are used to effect the Balance of Payments. After this, we focus on some of the effects of Current Account imbalances. In the last module, we look at the different types of exchange rate regimes.

The Capital, Current and Financial Accounts

In this module, we look at the three separate accounts of the Balance of Payments - the Capital, Current and Financial Accounts. In particular, we will focus on: (i) the difference between the current, capital and financial accounts on the balance of payments; (ii) the current account comprises trade in goods, trade in services, primary income and secondary income; and (iii) the meaning of a deficit and a surplus on the current account.