Definizioni Economics of international Markets

Economics of international markets

Gross national product (GNP)

Gross national product (GNP) (Prodotto nazionale lordo) is the value of all final goods and services produced by a nation’s factors of production in a given time period.

GNP: C + I + G + CA

Gross domestic product (GDP)

Gross domestic product (GDP) measures the final value of all goods and services that are produced within a country in a given time period.

GDP: GNP - payments from foreign countries for factors of production + payments to foreign countries for factors of production

The balance of payments (BOP)

The Balance of Payments (BOP) is a statement of all transactions made between entities in one country and the rest of the world over a defined period of time, such as a quarter or a year. It is made of Current account, financial account e kapital account.

Financial account

The financial account is the difference between sales of domestic assets to foreigners (foreign inflow) and purchases of foreign assets by domestic citizens (foreign outflow). Financial account has at least 3 subcategories:

• Official (international) reserve assets
• All other assets
• Statistical discrepancy

Valuation changes

Valuation changes: variations in the prices of the financial instruments that compose a country's international asset and liabilities positions

Can a country run a perpetual trade deficit?

• The response depends on the sign of a country’s initial NIIP
• If the country is a net debtor (NIIP<0), then the answer is no. In this case, the country will have to run a trade balance surplus at some point to service its debt.
• If the country is a net creditor (NIIP>0), then the answer is yes. It can run a perpetual trade deficit and finance it with the interest generated by its net investments abroad.

Exchange rates and international transactions

The nominal exchange rate is the rate at which a person can trade the currency of one country for the currency of another.

Depreciation is a decrease in the value of a currency relative to another currency.

Appreciation is an increase in the value of a currency relative to another currency.

The real exchange rate

The real exchange rate is the rate at which a person can trade the goods and services of one country for the goods and services of another. Il real ha al numeratore il Nominal e i prezzi Stranieri, quelli domestici al Denominatore = x ∗/

The real exchange rate measures the price of a basket of goods and services available domestically relative to the price of a basket of goods and services available abroad.

Spot rates

Spot rates are exchange rates for currency exchanges “on the spot,” or when trading is executed in the present.