Autonomous transactions
Also called: Above the line items · Topic: Balance of Payments and Exchange Rates · NCERT: Class 12, Ch 6 "Open Economy Macroeconomics"
Meaning
Autonomous transactions are international transactions made for their own reasons, such as earning profit, buying goods or investing. They happen whatever the state of the balance of payments. They are recorded "above the line". Their total balance tells us whether the BoP is in surplus or deficit.
Example
An Indian firm imports machines from Germany, and a US investor buys shares of an Indian company for profit. Both are autonomous transactions. If such payments exceed receipts, India has a BoP deficit that must then be filled.
Don't confuse with
- Accommodating transactions: these are made only to fill the BoP gap, mainly RBI's sales or purchases of reserves. They are recorded "below the line".
Related concepts
- Balance of payments surplus
- Accommodating transactions
- Official reserve transactions
- Errors and omissions
- International investment position