A User's Guide to BPM6-Based BOP and IIP Accounts

1 Pages Posted: 27 Feb 2018 Last revised: 23 Feb 2021

See all articles by Francis E. Warnock

Francis E. Warnock

University of Virginia - Darden Business School; National Bureau of Economic Research (NBER)

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Abstract

This note presents a short description of BPM6-based balance of payments (BOP) and international investment position (IIP) data. It works through examples using data for the United States and Mexico while providing guidance for understanding the data of just about any country.

Excerpt

UVA-GEM-0154

Rev. Jan. 7, 2021

A User's Guide to BPM6-Based BOP and IIP Accounts

This note presents a short description of balance of payments (BOP) and international investment position (IIP) data. It refers to data for the United States and Mexico, but given that there are worldwide standards for countries that report BOP and IIP, it provides guidance for understanding the data of just about any country.

The BOP accounts record international transactions (flows within a period of time), whereas the IIP records financial positions (stocks accumulated over time, reported as end-of-period values). In theory, there should be a straightforward link between the two. The BOP concerns the current account (trade in goods and services, plus remittance flows and income streams from international positions) and the transactions that finance it. The financing transactions the so-called capital flows result in cross-border positions in equities, debt, and other investment vehicles, and those positions are what make up the IIP. The position (or IIP) from year to year should evolve according to flows recorded in the BOP plus valuation changes (due to price and exchange rate movements).

Individual countries publish their own BOP and IIP data, but the easiest place to find the data is in various International Monetary Fund (IMF) databases available at . The IMF not only brings together BOP and IIP data for more than 100 countries, but it also ensures consistency in the presentation of the data and creates global standards for BOP and IIP reporting. IMF guidelines change infrequently; when they do, countries try (to various degrees) to restructure data collection systems so that data can be produced according to the current set of global guidelines. This note is based on the current set of guidelines, which were codified in the sixth edition of the IMF's Balance of Payments Manual (BPM6), which was released in November 2013.

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Keywords: balance of payments, international investment position, capital flows, current account

Suggested Citation

Warnock, Francis E., A User's Guide to BPM6-Based BOP and IIP Accounts. Darden Case No. UVA-GEM-0154, Available at SSRN: https://ssrn.com/abstract=3130383

Francis E. Warnock (Contact Author)

University of Virginia - Darden Business School ( email )

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HOME PAGE: http://faculty.darden.virginia.edu/warnockf/index.htm

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