Sector financial balances

13 Responses

    1. the lesson is that a government surplus (deficit) must, by accounting identity, be equal to a private sector deficit (surplus). therefore those who argue for government surpluses are really arguing for private sector deficits.

    1. Two choices:
      1. Install Microsoft’s “Microsoft Office Compatibility Pack” (allows Office 2007 files to be opened by earlier versions)
      2. Use Open Office (a free productivity suite)

      1. Hbl, thanks. I run Open Office quite a bit, but can’t figure it out from there either (I was told I’d have to deal with this latest MSFT nightmare at some point — guess it’s now!). Will check on the OOo site and the Compatibility Pack.

  1. In this graph, are the bars additive? In other words, if you see green “on top” of blue, is it blue + green, or is green “behind” blue? I think it has to be additive, otherwise the balances wouldn’t add to zero, but I just wanted to make sure…

  2. Domestic Private Sector Balance + Government Balance + Capital Account

    = sum of net financial assets in the US acquired net (surplus) or issued net (deficit) by each sector (private, government, foreign)

    = 0 by identity

    Bars are additive

    Capital account surplus (foreign sector surplus) is the inverse of current account deficit

    Private and foreign have acquired NFA (surplus)

    Government has issued NFA (deficit)

    Government deficit has been necessary to provide NFA to private sector during crisis

    Capital account surplus (current account deficit) has contracted during crisis

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