how do capital flows affect trade balance?
DESCRIPTION
How do capital flows affect trade balance?. Baseline vs. Policy simulation (Quotas eliminated in 2005) S – I = X - M + Net Transfer Trade balance: X –M DTBALR. DTBALR (CHN_TWN) (yr on yr difference). Change in Saving and investment (yr on yr difference). Investment. Saving. - PowerPoint PPT PresentationTRANSCRIPT
How do capital flows affect trade balance?
• Baseline vs. Policy simulation (Quotas eliminated in 2005)
• S – I = X - M + Net Transfer
• Trade balance: X –M
DTBALR
DTBALR (CHN_TWN)(yr on yr difference)
ba
sb-b
rrr-
20
05
ba
sb-b
rrr-
20
10
ba
sb-b
rrr-
20
15
% c
hang
e
0.02
0.018
0.015
0.013
0.01
0.007
0.005
0.002
0
-0.003
-0.005
-0.008
-0.01
-0.013
-0.015
-0.018
-0.02
-0.022
-0.025
-0.027
-0.03
Change in Saving and investment (yr on yr difference)
ba
sb-b
rrr-
20
05
ba
sb-b
rrr-
20
10
ba
sb-b
rrr-
20
15
% c
hange
4.25
4
3.75
3.5
3.25
3
2.75
2.5
2.25
2
1.75
1.5
1.25
1
0.75
0.5
0.25
Investment
Saving
Change in Saving and investment (yr on yr difference)
• S – I = X - M + Net Transfer
• Initial investment inflow results in deterioration of trade balance, relative to baseline
Changes in Net Transfer (yr on yr difference)
ba
sb-b
rrr-
20
05
ba
sb-b
rrr-
20
10
ba
sb-b
rrr-
20
15
% c
hang
e
22.5
20
17.5
15
12.5
10
7.5
5
2.5
0
-2.5
-5
-7.5
-10
-12.5
-15
-17.5
yqtf
yqht
Changes in Net Transfer (yr on yr difference)
• S – I = X - M + Net Transfer
• Increased capital earnings payments to trust require subsequent improvement in trade balance, relative to balance
China All Goods
-20000
-10000
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
2005 2010 2015
Domestic
Exports
Imports
0
10
20
30
40
50
60
70
80
90
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
East
West
North
-20000
-10000
0
10000
20000
30000
40000
50000
60000
70000
2005 2010 2015
Domestic
Exports
Imports
-2500
-2000
-1500
-1000
-500
0
500
1000
1500
2005 2010 2015
Domestic
Exports
Imports
Textiles
Grain
China – D, E, I
-8000
-6000
-4000
-2000
0
2000
4000
6000
2005 2010 2015 Domestic
Exports
Imports
0
200
400
600
800
1000
1200
1400
2005 2010 2015
Domestic
Exports
Imports
Textiles
Grains
NAM
• How does China and Taiwan’s accession to WTO affect textile sector and structural change?
Base
share in GDP 1995 2000 2005 2010 2015
1 grains 5.04 4.98 5.25 5.16 4.80
2 othfood 12.20 12.59 12.99 13.19 13.07
3 extract 19.36 19.44 18.40 19.51 20.16
4 textiles 3.27 2.75 2.18 2.19 2.16
5 mnfcs 11.11 11.22 10.35 11.85 12.48
6 services 49.01 49.01 50.83 48.11 47.33
policy
Share in GDP 2005 2010 2015
1 grains 4.99 5.05 4.97
2 othfood 12.61 12.97 13.16
3 extract 19.41 17.89 19.10
4 textiles 2.82 2.69 2.59
5 mnfcs 11.17 9.73 11.45
6 services 49.00 51.67 48.73
Cum dif in quantity
compvalad[*CHN_TWN] 1995-00 2000-05
2006-2010
2011-2015
Base case -14.28 -29.93 -27.88 -28.68
New Base case -12.2 -28.47 -26.83 -27.94
Policy shock -3.01 -4.12 -6.66
Domestic Sales and Outputs
basebasb-
2000basb-
2005basb-
2010basb-
2015
domestic sale 35.58 63.21 138.35 237.77
industry output 28.01 45.38 110.07 192.43
policy
domestic sale -12.4 -11.41 -10.94
ind output 21.79 20.86 20.28
Exports
qxs[textiles**] NA WEU Japan CHN OthNIC SEA SoAsia ROW
NAmerica -31.55 -6.13 -21.18 -87.78 -22.5 -23.65 -17.59 -10.54
WEurope -33.9 -9.35 -23.87 -68.9 -25.16 -26.29 -20.41 -13.61
Japan -35.8 -11.96 -26.1 37.41 -27.31 -28.41 -22.71 -16.11
CHN_TWN 262.13 157.42 31.05 203.67 28.75 26.64 36.8 49.02
OthNICs -33.83 -9.25 -23.78 71.88 -25.06 -26.19 -20.32 -13.51
SEA -30.26 -4.34 -19.67 -43.88 -21.01 -22.21 -16.04 -8.81
SoAsia -28.19 -1.49 -17.18 -89.3 -18.61 -19.86 -13.61 -6.09
ROW -33.35 -8.59 -23.23 -83.82 -24.54 -25.67 -19.71 -12.88
Export Prices
pxw[textiles*] b-2005 b-2010 b-2015
NAmerica -0.36 -0.17 -0.01
WEurope -0.07 0.12 0.27
Japan 0.25 0.38 0.51
CHN_TWN -6.35 -6.35 -6.52
OthNICs 0.56 0.73 0.77
SEA -0.24 -0.15 -0.08
SoAsia -0.66 -0.43 -0.28
ROW -0.15 0.04 0.22