why are autonomous are called above the line and said to occur before accommodating...plz explain regarding balance of pyament
Dear Student,
Autonomous items of Balance of Payments (BOP) are the transactions which are independent of the status of BOP of the country. These are recorded in BOP account as first items before the computation of deficit and surplus. The deficit or surplus, infact, occur due to autonomous items. These items are recorded before the accommodating items, therefore, referred as the 'above the line items' of BOP.
Regards
Autonomous items of Balance of Payments (BOP) are the transactions which are independent of the status of BOP of the country. These are recorded in BOP account as first items before the computation of deficit and surplus. The deficit or surplus, infact, occur due to autonomous items. These items are recorded before the accommodating items, therefore, referred as the 'above the line items' of BOP.
Contrary to it, accommodating items are a consequence of autonomous items and are undertaken to rectify the disequilibrium of autonomous items. So they are recorded after the BOP surplus or deficit is calculated with the help of autonomous items. Therefore, they are also called 'below the line items' of BOP.
Regards