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2025-05-12 22:57本頁(yè)面
【正文】 hanged. The position of foreign investments in the US changes, but the total amount does not change. The macro meaning of the current account balance ? A country’s current account balance equals the country’s foreign investment (CA=If). – When all the flows for current uses as goods, services, ine and gifts have been ted out, what is left is the increase in all of the foreign financial assets minus all of the country’s foreign liabilities. – The only things being exchanged between nations are goods, services, ine, gifts, and financial assets. If all credits must equal all debits, then the balance on goods, services, ine and gifts—that is the current account surplus must equal foreign investment (If), the accumulation of foreign assets minus foreign liabilities. The macro meaning of the current account balance ? A country’s current account balance equals national saving that is not invested at home (CA=S—Id). The CA balance is linked to its national saving and domestic investment. A country can do two things with its national saving (S): 1. Invest at home in domestic capital formation, which is domestic investment (Id). 2. Invest abroad in foreign investment (If). ? That is national saving S= Id +If. Looked at another way, the country’s foreign investment equals the difference between national saving and domestic investment (If=SId) The macro meaning of the current account balance ? A country’s current account balance (which is approximately equal to a country’s export) is the difference between its domestic production of goods and services and its total expenditure on goods and services (CA = X—M =Y– E). ? The current account balance is linked to domestic production, ine, and expenditure. Recall from basic macroeconomics that domestic production of goods and services (Y) equals the demand for the country’s production. The macro meaning of the current account balance ? Y = C + Id +G+XM Where: a. C = domestic household consumption of goods and services b. Id = domestic real investment in buildings, equipment, and inventories c. G =Government spending on goods and services d. X =foreign purchases of the country’s exports of goods and services e. M =the country’s purchases of imports from other countries. The macro meaning of the current account balance ? C, Id and G all include purchases of both domestically produced and imported goods and services. Imports must be subtracted separately because imports are not demand for this country’s products. ? The country’s total expenditure on goods and services (E, sometimes called absorption) simply equals consumption, domestic investment, and government spending: E = C + Id + G. Therefore, domestic product equals the country’s total expenditures plus exports, or Y = E +(XM). Again, look at another way, the country’s current account balance which is approximately equal to the country’s exports is also equal to difference between domestic product and national spending on goods and services: Y – E = X M. The macro meaning of the current account balance ? To summarize: current account balance equals: 1. Net foreign investment 2. The difference between national saving and domestic investment 3. The difference between domestic product and national expenditure ? If a country has a current account surplus: 1. The country has positive foreign investment (that is, the country is acting as a lender to or investor in the rest of the world) 2. The country is saving more than it is investing domestically 3. The country is producing more (and has more ine from this production) than it is spending on goods and services. The macro meaning of the current account balance ? If a country has a current account deficit, the country is a foreign borrower, its domestic saving less than domestic investment and spending more than production (or ine). ? These identities help us to see what must be changed if the current account balance is to be changed. ? For instance, consider a country that seeks to reduce its CA deficit. An improvement in the country’s current account balance must be acpanied by an increase in the value of domestic product (Y) relative to the value of national expenditur
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