Capital Lecture

Capital Lecture - Capital flows ECON 0424 Fall 2009...

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Capital flows ECON 0424 Fall 2009 Professor Leticia Arroyo Abad
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Agenda • Williamson and Rodrik • Assignment 2 • Midterm coming up • Research proposal summary due TODAY • Balance of payments • Capital flows
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Nobel Prize in Economics Elinor Ostrom Oliver E. Williamson half 1/2 of the prize half 1/2 of the prize USA USA Indiana University University of California Bloomington, IN, USA Berkeley, CA, USA b. 1933 b. 1932
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Balance of payments 101 • Current account (CA) – Trade balance (TB) • Exports of goods and services (X) • Imports of goods and services (M) – Net factor income from abroad (NFIA) – Net unilateral transfers (NUT) • Financial account (FA) – Exports of assets (EXa) – Imports of assets (IMa) • Capital account (KA)
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Current account Y = C + I + G + CA Y - C - G = S = I + CA CA balance measures how much a country can meet its investment needs through domestic savings.
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Current account
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• Financial account: – Records transactions between residents and nonresidents that involve financial assets – It covers all types of assets such as land, structures, and financial assets such as debt or equity – FA > 0: The country has exported more assets than imported. • Capital account:
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This note was uploaded on 04/19/2010 for the course ECON 0430 taught by Professor Arroyoabad during the Fall '10 term at Middlebury.

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Capital Lecture - Capital flows ECON 0424 Fall 2009...

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