Challenges to Balance of Payments Data Collection and its effect on International Business By Student’s Name Institution Date Overview Introduction Literature Review Data Presentation The Theory Data Analysis Conclusion Hello everyone, Today I am going to make a presentation on my topic which was Challenges to Balance of Payments Data Collection and its effect on International Business. After making a brief introduction, I will guide you through my literature review. Data presentation, theory used, analysis based on this theory and finally provide my conclusions and recommendations. Enjoy. 2 Introduction Increase in trade between countries due to globalization Economic and political differences in these countries mean differences in ability to do business cc Bop used to indicate all transactions (monetary and economic) between two or more countries Globalization has resulted to an increase in trade between countries irrespective of geographical location. However, given the economic and political differences in these countries, then the monetary and economic transactions made between the countries during the entire process becomes different. The BoP is a statement of all transactions (monetary and economic) between two or more countries during a specific period of time (Stern, 2017). All transactions have to be recorded for purposes of monitoring the financial activities between countries. 3 Introduction Cont. The bop is used to account for all transactions made by a country over a specific period of time, recorded in three separate accounts; Current account The capital account The financial account Challenges addressed include Errors And Omissions (Statistical Discrepancies), Fluctuating Exchange Rates Change In The Value Of Money And Other Accounting Conventions According to the Federal Reserve Bank of New York, the BoP is used to account for all transactions made by a country over a specific period of time, recorded in three separate accounts. These are the current account, the capital account, and the financial account (Scitovsky, 2016). Understanding how the balance of payments works in a country is critical to keeping the right kind of records. However, challenges to the collection of data on balance of payments oftentimes result from the problems of BoP. For instance, a country will be unwilling to release data that indicates how badly the economy is in a BoP disequilibrium. Others include errors, and omissions (statistical discrepancies), fluctuating exchange rates, change in the value of money and other accounting conventions (Kyle, 2015). 4 Literature review Razmi (2015) Fávaro, Da Silva & Pirtouscheg (2016) Bouchet, Fishkin & Goguel (2018) Des Roches & Betancourt (2016) Ko & Ha (2018) Edmond, Midrigan & Xu, (2015) A number of studies have been used to illustrate how BOP affects the ability of countries to do business. This sudy analyzed just but a few including the following; Razmi (2015) Fávaro, Da .

1. Challenges to Balance of Payments Data Collection and its
effect on International Business
By
Student’s Name
Institution
Date
Overview
Introduction
Literature Review
Data Presentation
The Theory
Data Analysis
Conclusion
Hello everyone,
Today I am going to make a presentation on my topic which was
Challenges to Balance of Payments Data Collection and its
effect on International Business. After making a brief
introduction, I will guide you through my literature review.
Data presentation, theory used, analysis based on this theory
and finally provide my conclusions and recommendations.
Enjoy.
2
Introduction
Increase in trade between countries due to globalization
Economic and political differences in these countries mean

2. differences in ability to do business cc
Bop used to indicate all transactions (monetary and economic)
between two or more countries
Globalization has resulted to an increase in trade between
countries irrespective of geographical location. However, given
the economic and political differences in these countries, then
the monetary and economic transactions made between the
countries during the entire process becomes different. The BoP
is a statement of all transactions (monetary and economic)
between two or more countries during a specific period of time
(Stern, 2017). All transactions have to be recorded for purposes
of monitoring the financial activities between countries.
3
Introduction Cont.
The bop is used to account for all transactions made by a
country over a specific period of time, recorded in three
separate accounts;
Current account
The capital account
The financial account
Challenges addressed include
Errors And Omissions (Statistical Discrepancies),
Fluctuating Exchange Rates
Change In The Value Of Money And Other Accounting
Conventions
According to the Federal Reserve Bank of New York, the BoP is
used to account for all transactions made by a country over a
specific period of time, recorded in three separate accounts.
These are the current account, the capital account, and the
financial account (Scitovsky, 2016). Understanding how the
balance of payments works in a country is critical to keeping

3. the right kind of records. However, challenges to the collection
of data on balance of payments oftentimes result from the
problems of BoP. For instance, a country will be unwilling to
release data that indicates how badly the economy is in a BoP
disequilibrium. Others include errors, and omissions (statistical
discrepancies), fluctuating exchange rates, change in the value
of money and other accounting conventions (Kyle, 2015).
4
Literature review
Razmi (2015)
Fávaro, Da Silva & Pirtouscheg (2016)
Bouchet, Fishkin & Goguel (2018)
Des Roches & Betancourt (2016)
Ko & Ha (2018)
Edmond, Midrigan & Xu, (2015)
A number of studies have been used to illustrate how BOP
affects the ability of countries to do business. This sudy
analyzed just but a few including the following;
Razmi (2015)
Fávaro, Da Silva & Pirtouscheg (2016)
Bouchet, Fishkin & Goguel (2018)
Des Roches & Betancourt (2016)
Ko & Ha (2018)
Edmond, Midrigan & Xu, (2015)
5
Data Presentation
BoP = CuA+CA+FA-NeO
Where BoP=Balance of Payment
CuA=Current Account

4. CA=Capital Account
NeO=Net Error Omissions
In order to illustrate the challenges in Balance of Payments
Data Collection and its effect on International Business, this
study collected the available data on the current account, capital
account, financial account and the net errors omissions from
trade between USA and China. Their balance of payment was
then calculated using the following formula;
6
Data Presentation Cont. YearQuarterCurrent account (excludes
reserves and related items)Capital account (excludes reserves
and related items)Financial account (excludes reserves and
related items)Net errors and omissions2017Q1-84840-1-
5416330437.06Q2-1339160-11532818738.66Q3-11419024787-
101682-12340.65Q4-116191-40-5900155686.679392018Q1-
93794-2-144647-50857.66Q2-118290-5-148497-27121.10Q3-
138602562-24450113411.76
Available fata data on the current account, capital account,
financial account and the net errors omissions from trade
between USA and China as recorded in the IMF is as indicated
in the slide above.
7
Data Presentation Cont.
A visual presentation of this data is included in the bar graphs
below;
The first figure presents the balance of payments data calculated

5. from the available CuA, CA, FA and NeO. A negative value
indicates that there was a deficit. The second figure provides
the data for the CA, CuA, FA and NeO in graphic.
8
BOP
BOP 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
2018Q3 -169441.06476675376 -267982.66425245028
-178744.34818779078 -230918.67938600294 -
187585.33703370698 -239670.89715554664 -
275901.76326971489
Current account (excludes reserves and related items) 2017Q1
2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3
-84840 -133916 -114190 -116191 -93794 -
118290 -138602 Capital account (excludes reserves and
related items) 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1
2018Q2 2018Q3 -1 0 24787 -40 -2 -5
562 Financial account (excludes reserves and related
items) 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1
2018Q2 2018Q3 -54163 -115328 -101682 -
59001.000000000007 -144647 -148497 -24450 Net
errors and omissions 2017Q1 2017Q2 2017Q3 2017Q4
2018Q1 2018Q2 2018Q3 30437.064766753752
18738.6642524503 -12340.651812209237
55686.679386002928 -50857.662966293028 -
27121.102844453355 113411.76326971492
The Balance of Payment Theory

6. Exchange rate of a particular country affects the position of the
balance of payments.
Unfavorable balance of payments causes a depreciation of the
external value
Favorable balance of payments leads to an appreciation in the
external value of the currency of the country
This theory asserts that the exchange rate of a particular country
affects the position of the balance of payments. Indeed, a
favorable balance of payments leads to an appreciation in the
external value of the currency of the country while an
unfavorable balance of payments causes a depreciation of the
external value. Challenges in the collection of this data arise
when these exchange rates are fluctuating so much, or when
there are irregularities when coming up with the exchange rates
themselves, which are determined by the current account and
financial account.
9
Data AnalysisRegression StatisticsMultiple R1R
Square1Adjusted R Square1Standard Error6.76652E-
12Observations7dfSSMSFSignificance
FRegression41122745650428068641266.13043E+311.63121E-
32Residual29.15715E-234.57857E-
23Total611227456504CoefficientsStandard Errort StatP-
valueIntercept6.54836E-112.03361E-
113.2200731910.084410704Current account 12.67639E-
153.73638E+147.16305E-30Capital account12.69809E-
153.70633E+147.27968E-30Financial account 12.58184E-
153.8732E+146.66591E-30Net errors and omissions-12.63246E-
15-3.79872E+146.92987E-30
To illustrate how a slight change might affect the balance of
payment, a regression analysis was fitted to the data collected

7. from IMF. It is important to note that this data has no
irregularities as it is assumed that IMF did not have any
challenges. Therefore, the data depicts a perfect relationship
between CuA, CA, FA and NeO as indicated by the regression
results included in the
10
Data Analysis Cont.
BoP = 6.54836E-11+CuA+CA+FA-NeO
Where 6.54836E-11= coefficient which is basically 0.00.
BoP=Balance of Payment
CuA=Current Account
CA=Capital Account
NeO=Net Error Omissions
From the regression table results above, with BoP as the
dependent variable and Current account, Capital account,
Financial account and Net errors and omissions, then the
formula derived is as follows;
BoP = 6.54836E-11+CuA+CA+FA-NeO
Where 6.54836E-11= coefficient which is basically 0.00.
BoP=Balance of Payment
CuA=Current Account
CA=Capital Account
NeO=Net Error Omissions
All the independent variables have a coefficient of 1 (with p
values of 0.00), implying that when the data is collected without
any issues/challenges, then the formula tallies with the formula
asserted by the balance of payment theory.
11
Conclusion
Having the perfect data collected over a given period of time

8. will always result to accurate BoP
It is clear that having the perfect data collected over a given
period of time will always result to accurate BoP that reflects
the ability of a country to engage in international business. Data
from IMF was used to affirm this claim, and a regression
analysis revealed that the formula for calculating BoP as
provided for by the balance of payments theory is accurate when
the data has been collected in the best possible manner, given
that net error omissions were considered. Challenges to the
collection of balance of payments identified by this study
included errors, and omissions (statistical discrepancies),
fluctuating exchange rates, change in the value of money and
other accounting conventions (Kyle, 2015).
12
References
Des Roches, J. D. B., & Betancourt, R. G. (2016). Balance of
payments and exchange rates. Chapters, 5-21.
Fávaro, F. F. F., Da Silva, G. J. C., & Pirtouscheg, L. A. S.
(2016). Bureaucracy, External Trade and Long-Term Growth in
a Balance-of-Payments Constrained Growth Model. In Anais do
XLIII Encontro Nacional de Economia [Proceedings of the 43rd
Brazilian Economics Meeting] (No. 113). ANPEC-Associaà §
ã o Nacional dos Centros de Pós-Graduaà § ã o em
Economia [Brazilian Association of Graduate Programs in
Economics].
Ko, J. H., & Ha, J. W. (2018). A Trade War between China and
the United States and Its Likely Economic Impacts. Journal of
Global and Area Studies (JGA), 2(2), 47-64.
Kyle, J. F. (2015). The balance of payments in a monetary
economy. Princeton University Press.
Razmi, A. (2015). Correctly analysing the balance-of-payments
constraint on growth. Cambridge Journal of Economics, 40(6),

9. 1581-1608.
Scitovsky, T. (2016). Money and the Balance of Payments.
Routledge.
Stern, R. (2017). Balance of Payments: Theory and Economic
Policy. Routledge.
13
THE END
Any Questions?
Title: Challenges to Balance of Payments Collection and the
Effect on Investment Business
RUBRIC 1. ASSESSMENT of PRESENTATION and DRAFT
PAPER: In addition to
making detailed comments on the paper itself, students should
fill out the column on the Draft Paper. I will also make
comments on the paper and fill out the column on the
Presentation.
Indicate N/A where the issue is not applicable.
Issue
Score (1 to 5)
Comments
Presentation
Draft Paper
Description of the
topic
5

10. Literature
review/Previous studies
5
Theory
3
Comments are provided in separate page
Analysis
3
Comments are provided in separate page
Economic content
3
Comments are provided in separate page
Charts and Tables
3
Comments are provided in separate page
Asking and answering questions
4
Comments are provided in separate page
References
5
Overall assessment
3.625
Suggested rating system:
5 – Exceptional: Paper is comprehensive and structure follows

11. logically; theory is presented and interpreted accurately;
thoroughly evaluates previous research and all references are in
paper; demonstrates understanding of economic analysis, charts
are clear and informative, no typos or grammatical errors,
references are complete and in required format, exceptional
preparation.
4 – Above average – Paper presents most of the material and
follows the structure; theory presented and interpreted with
satisfactory understanding; previous research evaluated but
some references are missing from paper; good understanding of
economic analysis, charts are clear but missing some
explanation; a few typos and grammatical errors; references are
nearly complete and most are in standard format, good
preparation and presentation.
3 – Average – Paper presents material and follows some of the
structure; theory is presented with basic interpretation; adequate
literature review, some errors in economic analysis, charts are
good; some typos and grammatical errors; some references and
not all are in standard format, well prepared.
2 – Below average – Paper shows basic economic analysis and
follows structure; theory presented but without interpretation,
literature review is minimal; many errors in economic analysis;
charts are adequate; many typos and grammatical errors; few
references and not in standard format, some preparation is
lacking
1 – Insufficient – Paper does not present an economic argument
and doesn’t follow the assigned structure, theory is not
presented, there is no review of literature, flawed economic
analysis, charts are not clear and/or missing, numerous typos,
few or no references and not in standard format, clear neglect in
conducting the project.
1
Comments

12. Your topic is very relevant and you explored relevant
bibliography. However, you have work to do on your empirical
analysis. My comments are as follows:
· You provide sufficient explanations on why the issue you
address is important. However, you should be clearer on the
questions you would like to address. The title of your paper
refers to effects on international business, but your empirical
analysis does not show any work in this area.
· You should be more specific on how your paper extends the
body of knowledge.
· My major concern is on your empirical analysis. Your
regression is not meaningful because you are estimating an
identity. A possibility is for you to focus on identifying,
quantifying, and explaining the statistical discrepancies in the
BOP of China and the US. You could look at the following
sources for guidance:
· https://www.imf.org/external/pubs/ft/bop/2016/pdf/16-12.pdf
·
https://www.federalreserve.gov/pubs/ifdp/2000/678/ifdp678.pdf
· https://economic-research.bnpparibas.com/html/en-US/China-
external-accounts- transition-7/23/2015,25853
· https://rhg.com/research/foreign-investment-in-china-a-tale-
of-two-statistics/
Another possibility is for you to focus on discrepancies in
bilateral transactions between China and the US. To my
knowledge, given limitations in available data, you would need
to focus on discrepancies in trade data, using data from the IMF
Direction of Trade Statistics. You could compare, for instance,
exports from China to the USA with imports from China by the
USA and identify and quantify discrepancies. The following
sources could be useful:
o http://data.imf.org/?sk=9D6028D4-F14A-464C-A2F2-
59B2CD424B85

13. · http://datahelp.imf.org/knowledgebase/articles/484353-why-
do-the-exports-of- country-a-to-country-b-not-e
· https://www.gfintegrity.org/are-bilateral-trade-statistics-
unreliable/
· In presenting your empirical results, you should describe your
variables and the significance of your results. In the text, you
should provide an intuitive explanation of your results and
provide technical details in an annex (or refer to bibliography
that provide such technical details on the empirical techniques).
· You should identify in your concluding section possible areas
for future research.
The comments from the professor
when you upload the literature review and present to class
please provide more specifics on the issues you plan to
assess (for instance, would you focus on explaining statistical
discrepancies in the balance of payments of specific countries?
which
ones? would you look into the global discrepancy?). Also,
provide more
specifics on how you will structure your analysis and the
sources of
data you plan to use.
Paper requiment:
Your applied international economics paper should have the
following sections:
1. An introduction that presents your issue and why this issue is
important. Your introduction should be explicit and be clear
about the issue you are addressing/question you are answering.
2. A brief analysis of previous work on the topic and a
discussion of how your paper extends this body of knowledge.

14. Note that this section will be a summary of the full literature
review and analysis you conducted.
3. At least three charts/tables/diagrams that provide a good
visual picture of your data.
4. A description of the theory that applies to your question. This
section should include a few mathematical equations that
illustrate your theory and/or model.
5. A discussion of the data that you would use in an empirical
analysis and an econometric specification, including a
description of variables, why they belong in your model and the
impact you expect the dependent variables to have on your
independent variable.
6. A brief conclusion that summarizes what you learned and
possible areas for future research.
The two rubrics is attached below.