A Study the Relationship between Balance Of Payment and National Income in Lao PDR

Abstract

The national income and balance of payments are very important role and cannot be isolated from each other because of the balance of payments is linked to affected the national income in the term of using of the fiscal and monetary policy. In this case, we have 2 objectives: understanding the overview and analysis of the relationship between national income and balance of payments. The data collection is from different sources as Bank of Lao PDR., Asian Development Bank and the World Bank to describe perfectly content. This journal, we used to describe and analysis the econometric on using the program Stata 13 to analysis by setting model assumptions of national income and the independent variables of the balance of payments. The finding results reveal that: the changing of the balance of payments are influencing to the growing of national income of Lao PDR. Independent variables affect that: if balance of payment or BOP, money supply or M2 and Foreign direct investment or FDI are change up or down 1 unit or $ 1 million would make national income change increases or decreases 3.58 units or $3.58 million, 1.57 units or $1.57 million and 1.80 units or 1.80 million respectively.