Abstract
This chapter has two objectives. The first is to relate flow-of-funds accounts to balance-sheets and the national income/ expenditure accounts. These relationships are illustrated by analysing simplified accounts of the six sectors identified in the flow-of-funds tables. The second objective is to demonstrate the reduction in risk attainable through portfolio diversification. This last section is somewhat technical, but the principle is important since it helps explain the significance of financial intermediaries, a topic we shall be returning to in Chapter 8.
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References
*A. D. Bain, ‘Flow of Funds Analysis: A Survey’, Economic Journal, Dec 1973.
Bank of England, United Kingdom Flow of Funds Accounts 1963–1976 (May 1978).
S. Brittan, Steering the Economy (Harmondsworth: Penguin Books, 1971).
*J. Cohen, ‘Copeland’s Money flows After Twenty-five Years: A Survey’, Journal of Economic Literature, 1972.
*G. S. Dorrance, National Monetary and Financial Analysis (London: Macmillan Press, 1978).
J. C. Francis and S. H. Archer, Portfolio Analysis (Englewood Cliffs, N.J.: Prentice-Hall, 1971).
H. Levey and M. Sarnat, Investments and Portfolio Analysis (New York: Wiley, 1972).
J. Revell, The Wealth of the Nation (Cambridge University Press, 1967).
J. Revell and A. R. Roe, ‘National Balance Sheets and National Accounting — A Progress Report’, Economics Trends, 1971.
A. R. Roe, The Financial Interdependence of the Economy, 1957–1966 (Department of Applied Economics, University of Cambridge/Chapman & Hall, Nov 1971).
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© 1980 Richard Coghlan
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Coghlan, R. (1980). Balance-Sheets and Flows of Funds. In: The Theory of Money and Finance. Palgrave, London. https://doi.org/10.1007/978-1-349-86121-7_6
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DOI: https://doi.org/10.1007/978-1-349-86121-7_6
Publisher Name: Palgrave, London
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