Current Account Balance

The current account balance is a measure of a country’s international trade. It is the difference between a country’s total exports and imports of goods, services, and transfers. A positive current account balance indicates that a country is a net exporter, while a negative current account balance indicates that a country is a net importer. The current account balance is an important indicator of a country’s economic health and can be used to assess its ability to pay for imports and service its external debt.

History of the Term

The concept of the current account balance has been around since the early 19th century. It was first used by the British economist David Ricardo in his 1817 book, On the Principles of Political Economy and Taxation. Ricardo argued that a country’s current account balance should be in equilibrium, meaning that the value of its exports should equal the value of its imports. This idea was later adopted by other economists, including John Stuart Mill and Alfred Marshall, and became the basis for the modern concept of the current account balance.

Comparison Table

Summary

The current account balance is an important indicator of a country’s economic health and can be used to assess its ability to pay for imports and service its external debt. It is the difference between a country’s total exports and imports of goods, services, and transfers. A positive current account balance indicates that a country is a net exporter, while a negative current account balance indicates that a country is a net importer. For more information on the current account balance, visit the websites of the International Monetary Fund, the World Bank, and the United Nations.

See Also

• Balance of Payments
• Capital Account Balance
• Foreign Exchange Reserves
• Gross Domestic Product
• Inflation
• Interest Rates
• Trade Balance
• Unemployment Rate
• Exchange Rate
• Gross National Product

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