{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

VI.A. - Real GNP = Real GDP Real National Income = Real GDP...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
VI. A. Balance of Payments 1. National Income Accounting with a focus on International Transactions Now we can buy and sell goods and assets across borders. For simplicity, assume that the only assets that can be traded across borders are bonds. Asset Trading --- holding of international assets net of their holdings of our assets > 0 (net international investment position--lender) < 0 (net international investment position--borrower) (net foreign investment—change in asset position)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
(real interest income earned from foreign assets)
Background image of page 2
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Background image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Real GNP = Real GDP + Real National Income = Real GDP – Depreciation + = Real Expenditures = Real Expenditures = Real Income => = => = or (*) = Goods Trading => (**) (trade balance) Combining (*) and (**) (***) = (current account) Start with an initial net asset position with NX > 0 => > 0 (trade surplus => net international lender) NX < 0 => < 0 (trade deficit => net international borrower) 2. History of Trade and Current Account Balance Barro Ch.17 PP1-3...
View Full Document

{[ snackBarMessage ]}