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Unformatted text preview: home are low (high) relative to other countries. Real interest rates are determined by the asset market equilibrium condition or in the Cobb-Douglas case So the MPK and r are high when (i) A is high (ii) k is low (say due to a low saving rate or high population growth) Net borrower => Trade/Current Account Deficit the MPK and r are low when (i) A is low (ii) k is high (say due to a high saving rate or low population growth) Net lender => Trade/Current Account Surplus...
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This note was uploaded on 02/19/2011 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue University-West Lafayette.
- Spring '08