What are cyclical factors on the CAD and what does it mean (1 Viewer)

[Iunny]

If you have the leading edge book, its on pg 83, last paragraph, i have no idea what it means. Can someone explain it plz?

Australia's current account deficit moves in cycles, reflecting a mix of short and longer term, domestic and external influences.

what does that line mean?

Its movements are influenced by short erm cyclical factors - such as changes in global demand for commodities, Australia's terms of trade and the demand for imports from Australian consumers and businesses. In 2002-03, it worsened dramatically, reflecting a combination of cyclical factors.

And this?

So what are cyclical factors?

thx

 

[Konomi]

Well.. i think the first bit means that its a bit like the business cycle. so it can have times of extreme CAD, and times of less

Cyclical factors are factors resulting from the business cycle. So in times of a boom, the CAD may not be as high, as vice versa

 

[grimreaper]

Basically, the cyclical factors of the CAD are the goods and services accounts. These accounts are vulnerable to fluctuations in the world economy, as demand rises\falls due to several factors(the business cycle, consumer preferences, etc). The Income account is a structural factor, as it doesn't change too much over time.

 

[AGB]

Originally posted by grimreaper
Basically, the cyclical factors of the CAD are the goods and services accounts. These accounts are vulnerable to fluctuations in the world economy, as demand rises\falls due to several factors(the business cycle, consumer preferences, etc). The Income account is a structural factor, as it doesn't change too much over time.

precisely correct