Errors and omissions
Topic: Balance of Payments and Exchange Rates · NCERT: Class 12, Ch 6 "Open Economy Macroeconomics"
Meaning
Errors and omissions is the balancing item in the balance of payments. It shows the statistical discrepancy, the gap left because not every international transaction can be recorded accurately. Some flows are missed, some are recorded late, and some are valued wrongly. It forms part of the overall balance: Overall balance = current account + capital account + errors and omissions.
Example
In NCERT's Table 6.1, the current account balance is −38 and the capital account balance is 41.15, so together they come to +3.15. For the overall balance to be zero, errors and omissions must be −3.15. The table wrongly prints it as +3.15.
Related concepts
- Balance of payments surplus
- Autonomous transactions
- Accommodating transactions
- Official reserve transactions
- International investment position