ABSTRACT
At a microeconomic level, balance of payments measures are used to: analyse the economic role of individual goods and services accounts; quantify variations in the magnitude and direction of capital flows; identify the sources and uses of foreign exchange. Balance of payments measures record international flows denominated in the currency of the country compiling the accounts. Exports and imports of goods and services are flows and are consequently recorded directly in balance of payments accounts. Although the balance of payments must always be in accounting equilibrium, it does not always have to be in economic equilibrium. Balance of payments disequilibrium arises when the adjustment process is unable to restore equality between autonomous credits and debits. Several different balance of payments measures can be derived, ranging in scope and application from narrow and specific to broad and general. Global current account balances must sum to zero since, definitional and statistical discrepancies notwithstanding, global surpluses and deficits must balance.
