Economics. Dr. Pass Christopher

Чтение книги онлайн.

СКАЧАТЬ door the informal mechanism whereby the BANK OF ENGLAND buys back previously issued TREASURY BILLS in the DISCOUNT MARKET at their ruling market price in order to release money to help the DISCOUNT HOUSES overcome temporary liquidity shortages. This is done as a means of increasing the liquid funds available not only to the discount houses themselves but also to the COMMERCIAL BANKS at prevailing interest rates to enable them to maintain their lending. Compare FRONT DOOR.

      back-to-back loan or parallel loan an arrangement under which two companies in different countries borrow each other’s currency and agree to repay the loans at a specified future date. At the expiry date of the loans, each company receives the full amount of its loan in its domestic currency without risk of losses from exchange-rate changes. In this way back-to-back loans serve to minimize EXCHANGE-RATE EXPOSURE.

      backward integration the joining together in one firm of two or more successive stages in a vertically related production/distribution process, with a later stage (for example, bread making) being combined with an earlier stage (for example, flour milling) Backward integration is undertaken to cut costs and secure supplies of inputs. See VERTICAL INTEGRATION, FORWARD INTEGRATION.

      BACS (Bank Automated Credit System) a money transmission system whereby a payer instructs a COMMERCIAL BANK to debit a specified sum of money from his or her account and transfer it to a named payee’s bank account. This obviates the need for the payer to issue and post a cheque to the payee and for the payee then to bank it, thus saving on time and expense. Many employers now use BACS to pay their employees’ monthly salaries, and many companies use the system to transfer dividend payments to shareholders.

      bad debt an accounting term for money owed that is unlikely to be paid because, for example, a customer has become insolvent (see INSOLVENCY). Such bad debts are written off against the PROFITS of the trading period as a business cost. See CREDIT CONTROL.

      balanced budget a situation where GOVERNMENT EXPENDITURE is equal to TAXATION and other receipts. In practice, most governments run unbalanced budgets as a means of regulating the level of economic activity.

      Where the government spends more than it receives in taxation, then a BUDGET DEFICIT is incurred. Where the government spends less than it receives in taxation, then a BUDGET SURPLUS ensues. See BUDGET, FISCAL POLICY, PUBLIC SECTOR BORROWING REQUIREMENT.

      balanced budget multiplier a change in AGGREGATE DEMAND brought about by a change in GOVERNMENT EXPENDITURE, which is exactly matched by a change in revenues received from TAXATION and other sources. The change in government expenditure has an immediate effect on aggregate demand and generates income of an equivalent size. By contrast, the change in taxation does not change aggregate demand by an equivalent amount because some of the increased/reduced DISPOSABLE INCOME will be offset by changes in SAVING. Consequently, an increase in government expenditure and taxation of equal amounts will have a net expansionary effect on aggregate demand and incomes, while a decrease in government expenditure and taxation of equal amounts will have a net contractionary effect. See BUDGET, FISCAL POLICY.

       balance of payments

      A statement of a country’s trade and financial transactions with the rest of the world over a particular time period, usually one year. Fig. 13 (a), shows a summary presentation of the UK balance of payments for 2003. The account is divided into two main parts:

      (a) current account, and

      (b) capital and financial account.

      The current account shows the UK’s profit or loss in day-to-day dealings. It is made up under two headings. The ‘visible’ trade balance (BALANCE OF TRADE) indicates the difference between the value of merchandise EXPORTS and IMPORTS of goods (raw materials, foodstuffs, oil and fuels, semi-processed and finished manufactures). ‘Visibles’ are so called because they consist of tangible goods that can be seen directly and recorded by the country’s CUSTOMS AND EXCISE authorities as they move into or out of the country. The second group of transactions make up the ‘INVISIBLE’ TRADE BALANCE. These transactions include earnings from, and payments for, such services as banking, insurance, transport and tourism. It also includes interest, dividends and profits on investments and loans, and government receipts and payments relating to defence, upkeep of embassies, etc., and transfers to the European Union budget. (See Fig. 62 (a)).

      ‘Invisibles’ are so called because basically they represent transactions that cannot be seen directly and can be compiled only indirectly from company returns, government accounts, foreign currency purchases and sales data from banks. Traditionally, the UK has incurred deficits on ‘visibles’ largely because of the need to import basic foodstuffs, raw materials and (until the 1980s) oil. What are worrying to some economists, however, are the large deficits in manufactures, where seemingly the UK has been losing international competitiveness. (See DEINDUSTRIALIZATION.) The service sector has traditionally been in surplus thanks to the City of London’s banking and insurance business, which, together with proceeds from the UK’s position as a leading overseas investor, have been major foreign exchange earners. As can be seen in Fig. 13 (b), the UK has recently been in overall surplus on current account after previously chalking up large deficits.

      Fig. 13 Balance of payments. (a) The UK Balance of Payments, 2003. (b) UK Balance of Payments, 1993–2003. Source: UK Balance of Payments, Office for National Statistics (Pink Book), 2004.

      In addition to current account transactions, there are also currency flows into and out of the country related to capital items. The capital and financial account is made up of a number of elements including: receipts and payments related to FOREIGN DIRECT INVESTMENT (monies spent by companies on setting up or acquiring overseas manufacturing plants, sales offices, etc.); receipts and payments related to PORTFOLIO INVESTMENT (monies spent by mainly financial institutions in purchasing overseas stocks and shares, government bonds, etc.); and receipts and payments related to interbank transfers (for example, foreign currency deposits with UK commercial banks taking advantage of higher UK interest rates compared to other financial centres). Recently the UK has been a net exporter of capital after a number of years of capital account surpluses – see Fig. 13 (b).

      The current balance and the capital and financial account, together with the ‘balancing item’ (which includes errors and omissions in recording transactions and leads and lags in currency payments and receipts), result in the balance for official financing. This figure shows whether the country has incurred an overall surplus or deficit. If the balance of payments is in surplus, the country can add to its INTERNATIONAL RESERVES and, if necessary, repay borrowings; if it is in deficit, this has to be covered by running down its international reserves or by borrowing (for example, from the INTERNATIONAL MONETARY FUND).

      Maintaining BALANCE-OF-PAYMENTS EQUILIBRIUM over a run of years is usually one of the four major objectives of a government’s MACROECONOMIC POLICY. A balance of payments surplus or deficit can be remedied in a number of ways, including external price adjustments, internal price and income adjustments, and trade and currency restrictions.

      balance-of-payments disequilibrium see BALANCE-OF-PAYMENTS EQUILIBRIUM.

      balance-of-payments equilibrium a situation where, over a СКАЧАТЬ