Balance of payments accounts, International Economics

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Q. Consider how the United States' balance of payments accounts are affected when U.S. banks give two billion in debt owed to them by the government of Argentina.

Answer: In this case the United States builds a two billion dollars capital transfer to Argentina which must appear as a negative two billion dollar entry in the capital account. The linked credit is in the financial account in the form of a two billion dollar reduction in U.S. assets supposed abroad that is a net asset "export" and so a positive balance of payments entry.


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