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{{Short description|
{{For|the accountancy use of the term|Capital account (financial accounting)}}
In [[macroeconomics]] and [[international finance]], the '''capital account''', also known as the '''capital and financial account''', records the net flow of
A [[Economic surplus|surplus]] in the capital account means money is flowing into the country, but unlike a surplus in the current account, the inbound flows effectively represent borrowings or sales of assets rather than payment for work. A deficit in the capital account means money is flowing out of the country, and it suggests the nation is increasing its [[Foreign ownership|ownership of foreign assets]].
The term "capital account" is used with a narrower meaning by the [[International Monetary Fund]] (IMF) and affiliated sources. The IMF splits what the rest of the world calls the capital account into two top-level divisions: ''financial account'' and ''capital account'', with by far the bulk of the transactions being recorded in its financial account.
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==Definitions==
At high level:
\text{Capital Account} = \left[ {\text{Change in foreign ownership} \atop \text{of domestic assets}} \right] - \left[ {\text{Change in domestic} \atop \text{ownership of foreign assets}} \right]
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Breaking this down:
\text{Capital Account} = \left[ {\text{Foreign Direct} \atop \text{Investment}} \right] + \left[ {\text{Portfolio} \atop \text{Investment}} \right] + \left[ {\text{Other} \atop \text{Investment}} \right] + \left[ {\text{Reserve} \atop \text{Account}} \right]
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|date = 2009-11-18
|access-date=2009-12-15}}
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==See also==
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