Does the balance of payments matter anymore?

I have reached that time of the year when the dust is wiped from my balance of payments notes, charts are refreshed and my A2 group delve into the trade figues for different countries and ask the age old question, does it really matter if there are sizeable balance of payments imbalances?

The huge variations in the scale of current account deficits and surpluses from within the body of OECD countries seems to make this debate a live one again. Iceland’s financial crisis, the external deficits of many central and eastern european countries just a few years after their accession to the EU single market. And the continuing debate about the economics of the cavernous trade imbalances between China and the United States persuade me that ignoring the current account is a dangerous game.

As part of the discussion I have drawn some recent data from the OECD World Economic Outlook (November 2008) and a short glossary piece from the excellent Economist website. This is available below should colleagues wish to use and amend for their own students.

Student handout (word format)
Is_there_such_a_thing_as_a_balance_of_payments_crisis.doc

Economics Explained, by Evan [12 Feb 2012]
Unit 2 Macro: China’s Trade Engine is Spluttering [10 Feb 2012]
Martin Wolf on Global Shocks [10 Feb 2012]
Trucks are the new way of measuring debt [1 Feb 2012]
Unit 4 Macro: Focus on India - Comparative Advantage [27 Jan 2012]
Unit 2 Macro: Focus on China - Trade and Growth [27 Jan 2012]
Unit 2 Macro: Focus on China - Inflation [26 Jan 2012]
Unit 2 Macro: Focus on China - Carbon Emissions and Growth [26 Jan 2012]
Unit 2 Macro: Focus on China - Per Capita Incomes [26 Jan 2012]
Unit 2 Macro: Focus on China - Changing Economic Structure [26 Jan 2012]
Unit 2 Macro: Can China Stay Competitive [25 Jan 2012]
Unit 4 Macro: Focus on India - Economic Growth [24 Jan 2012]
Unit 2 Macro: Population Shift in China [23 Jan 2012]
Unit 2 Macro: Exporting to the Booming Chinese Economy [23 Jan 2012]
Unit 4 Macro: Money, Debt and the New World Order [22 Jan 2012]
Unit 4 Macro: Russia Joins the WTO [22 Jan 2012]
Unit 2 Macro: Videos on Productivity [17 Jan 2012]
Unit 2 Macro: Look Upwards to Find the next Downturn [15 Jan 2012]
Unit 4 Macro: France loses her AAA credit rating [15 Jan 2012]
Unit 2 Macro: Frontier Markets - the New BRICS? [15 Jan 2012]
Beyond the Bike - The Importance of Remittances [15 Jan 2012]
China’s newest 5 year plan - and how it could change the world! [12 Jan 2012]
Unit 4 Macro: Competitive Advantage in Trade (Some Videos) [12 Jan 2012]
Unit 4 Macro: UK Trade Patterns [11 Jan 2012]
Unit 1 Micro: Low Cost Airlines Beat the Recession [1 Jan 2012]
Unit 4 Macro: Exchange Rate Economics - Where next for the US Dollar? [31 Dec 2011]
European Economics: Resources on the CAP [28 Dec 2011]
Unit 2 Macro: Brazil Overtakes UK in Economic Size [26 Dec 2011]
The Eurozone Crisis Explained (again!) [22 Dec 2011]
Unit 4 Macro: Celebrating (?) Ten Years of Euro Notes and Coins [2 Dec 2011]
Jim O’Neill - The Growth Map: Economic Opportunity in the BRICs and Beyond [22 Nov 2011]
Beyond the Bike - The Value of Money [19 Nov 2011]
Unit 2 Macro: Should the EU introduce a Tobin Tax? [14 Nov 2011]
AS Macro: The State of British Business [13 Nov 2011]
Eurozone crisis - a selection of resources [12 Nov 2011]
Latest world trade data [6 Nov 2011]
Unit 4 Macro: China and India - Notes from Martin Wolf [6 Nov 2011]
Unit 4 Macro: Should TNCs make full disclosure on factory wages? [30 Oct 2011]
Can the “invisible hand” solve Africa’s poverty? [13 Oct 2011]
Unit 2 Macro: Can Exports Drive a Recovery? [13 Oct 2011]
Skidelsky in Madrid [12 Oct 2011]
The Return of Protectionism? [12 Oct 2011]
Why Is Macroeconomics Such A Mess? [11 Oct 2011]
Unit 4 Macro: USA edges closer to naming China as a “Currency Manipulator” [4 Oct 2011]
Unit 4 Macro: When China Met Africa [1 Oct 2011]
Greek debt decision tree [25 Sep 2011]
Unit 4 Macro: Greek Economy at Default’s Door [25 Sep 2011]
Unit 2 Macro: Greece on the Brink of Default [25 Sep 2011]
Unit 4 Macro: IMF Flags up Risks of Double Dip [20 Sep 2011]
Unit 4 Macro: Bangladesh and Comparative Advantage in Textiles [19 Sep 2011]
Unit 2 Macro: Economic Growth and Inequality [14 Sep 2011]
Mixing with the Nobel Economists [4 Sep 2011]
Toilet rolls, soap and climate change [1 Sep 2011]
Unit 4 Macro: Baltic Dry Index and Global Weakening [19 Aug 2011]
Unit 4 Macro: GDP per person since the credit crunch [19 Aug 2011]
Guess where China exports its chopsticks from [7 Aug 2011]
Capital labour substitution at FoxConn [2 Aug 2011]
hiphopnomics [31 Jul 2011]
A surprising example of trade between the USA, China, and Korea. [19 Jul 2011]
Unit 1 Micro: Cotton Prices and the Retail Price of Clothing [13 Jul 2011]
Harry Potter shows that China isn’t quite a market economy yet! [13 Jul 2011]
Unit 1 Micro: Economics of Volatile Corn Prices [12 Jul 2011]
China: The End of Cheap Labour [28 Jun 2011]
UK firms wake up to Brazilian opportunities [21 Jun 2011]
Evan Davis ‘Made in Britain’ - and a new trade data tool to play with [21 Jun 2011]
AQA ECON4 Context [20 Jun 2011]
Six Global Trends Shaping Business Strategy [15 Jun 2011]
Chinese inward investment in the London property market [12 Jun 2011]
Development Econ: Wealth and Inequality in China [10 Jun 2011]
Invisible Exports - Originating Journalist is remembered [27 May 2011]
Do tariffs actually reduce imports? [26 May 2011]
Macro Revision: Putting Things in Context [25 May 2011]
AS Macro Key Term: Supply-Side Policies [25 May 2011]
PIIGS on the chopping block? [24 May 2011]
AS Macro Key Term: Recession [23 May 2011]
AQA A2 Economics - European Context [23 May 2011]
Revision notes on unemployment [22 May 2011]
A2 Micro:  Monopsony Power in Markets [19 May 2011]
EU Economics: Comparing the UK with Europe [14 May 2011]
A2 Macro: Revealed Advantage [12 May 2011]
AS Micro: What´s really behind the oil price rise? [10 May 2011]
Interest Rates Held at 0.5% once again [5 May 2011]
A2 Macro: Chinese investment in the EU [3 May 2011]
AS Micro: Rising Global Food Prices [2 May 2011]
Video Clips on the Chinese Economy [1 May 2011]
Consequences of One Child Policy Play Out [30 Apr 2011]
EU Enlargement - Evaluating the Impact [30 Apr 2011]
A2 Micro: EU Aviation - State Aid and State Ownership [28 Apr 2011]
AS and A2 Macro Revision: The China Effect [26 Apr 2011]
A2 Macro: Twin Deficits [22 Apr 2011]
UK Economy at a Glance April 2011 [17 Apr 2011]
China set to become exporter of inflation [14 Apr 2011]
Focus on Ireland’s Economy [12 Apr 2011]
OCR F585 June 2011: Euro Area on the Rocks? [11 Apr 2011]
AS Macro Key Term: Monetary Policy Tightening [11 Apr 2011]
AS Micro: The volatile price of crude oil [9 Apr 2011]
A2 Macro: Paul Mason’s blogs on the Euro Crisis [7 Apr 2011]
ECB breaks rank and raises interest rates [7 Apr 2011]
EU Economics - Portugal Reaches for Bail Out [6 Apr 2011]
AS Macro Key Term: Economic Structure [6 Apr 2011]

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