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

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  • Tuck Cheong Tang

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.

Suggested Citation

  • Tuck Cheong Tang, 2013. "New Perspectives on the ‘Net Errors & Omissions’ in Balance of Payment Accounts: An Empirical Study - Australia," Monash Economics Working Papers 54-13, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2013-54
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    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2013/index.html
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    Cited by:

    1. Maria Siranova & Menbere Workie Tiruneh, 2016. "The determinants of errors and omissions in a small and open economy: The case of Slovakia," Working Papers wp73, Institute of Economic Research, Slovak Academy of Sciences, revised 08 Apr 2016.
    2. Liung shi Ding & Tuck cheong Tang, 2017. "‘Net Errors and Omissions' of Balance of Payments and Its Sustainability: A Survey of Literature," Economics Bulletin, AccessEcon, vol. 37(4), pages 2753-2766.

    More about this item

    Keywords

    Australia; Balance of payment; Causality; Net errors and omissions;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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