New Perspectives on the ‘Net Errors & Omissions’ in Balance of Payment Accounts: An Empirical Study - Australia

Tuck Cheong Tang ()

No 54-13, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This study aims to identify and examine the potential economic factors that determining the ‘net errors & omissions’ (EO) in balance of payment accounts. Two structural specifications are derived from the balance of payments (BoP) constraint, and open economy macro equilibrium (income-expenditure approach), respectively. There are some positive findings. The empirical results obtained from the Australian data show real GDP, foreign income, foreign interest rate, domestic interest rate, and exchange rate have either directly or indirectly caused EO over the sample period 1960-2010. Also, a reverse direction is obtained from EO to domestic interest rate. This study is considered as an important reference for further research.

Keywords: Australia; Balance of payment; Causality; Net errors and omissions (search for similar items in EconPapers)
JEL-codes: F32 F41 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2013-07
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Citations: View citations in EconPapers (2)

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