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New Perspective on the ‘Net Errors and Omissions’ in Balance of Payment Accounts: An Empirical Study in Australia

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  • Tang Tuck Cheong

    (Department of Economics, Faculty of Economics & Administration, University of Malaya, 50603 Kuala Lumpur, Malaysia)

Abstract

This study explores the macroeconomic determinants of the ‘net errors and omissions’ behaviour in balance of payment accounts. Two empirical equations are being estimated as suggested by the balance of payments constraint, and income-expenditure approach, respectively. This study finds that GDP, interest rate, and exchange rate are the important factors explaining the Australian ‘net errors and omissions’. Causality tests have recognized the possible transmission channels. This study can be considered a new perspective in this topic and reference for further research.

Suggested Citation

  • Tang Tuck Cheong, 2017. "New Perspective on the ‘Net Errors and Omissions’ in Balance of Payment Accounts: An Empirical Study in Australia," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 13(2), pages 27-44.
    • Handle: RePEc:usm:journl:aamjaf01302_27-44
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    References listed on IDEAS

    as
    1. Duffy, M & Renton, Anthony, 1971. "An Analysis of the U. K. Balancing Item," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 12(3), pages 448-464, October.
    2. Christis Tombazos, 2003. "New light on the 'impressionistic view' of the balancing item in Australia's balance of payments accounts," Applied Economics, Taylor & Francis Journals, vol. 35(12), pages 1369-1378.
    3. International Monetary Fund, 1996. "Bahamas: Recent Economic Developments," IMF Staff Country Reports 1996/126, International Monetary Fund.
    4. Mei-yin Lin & Hui-hua Wang, 2009. "What Causes the Volatility of the Balancing Item?," Economics Bulletin, AccessEcon, vol. 29(4), pages 2738-2748.
    5. International Monetary Fund, 1996. "Australia: Recent Economic Developments," IMF Staff Country Reports 1996/037, International Monetary Fund.
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