notes_macro_ch5 - MACROECONOMICS Macro Notes G.Karras 2011...

Info icon This preview shows pages 1–11. Sign up to view the full content.

View Full Document Right Arrow Icon
Macro Notes © G.Karras 2011 MACROECONOMICS Georgios Karras* University of Illinois at Chicago * Professor of Economics; Mailing Address: Department of Economics, University of Illinois at Chicago, 601 S. Morgan St., Chicago, IL 60607-7121; e-mail: [email protected] . Lecture Draft Do not cite without permission
Image of page 1

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

View Full Document Right Arrow Icon
Macro Notes © G.Karras 2011, p.2 ││ 5 ││ THE OPEN ECONOMY 5.1. The Balance of Payments Credit Debit Balance Exports EX CA Imports IM Unilateral Transfers UT Current Account Balance CA = EX IM UT KA Capital Inflows CI Capital Outflows CO Capital Account Balance KA = CI CO Balance of Payments BP = CA+KA = 0
Image of page 2
Macro Notes © G.Karras 2011, p.3 Note: CA + KA = 0 CA = KA CA │ = │ KA CA deficit = KA surplus or CA surplus = KA deficit Intuition: Capital Account shows how Current Account is financed
Image of page 3

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

View Full Document Right Arrow Icon
Macro Notes © G.Karras 2011, p.4
Image of page 4
Macro Notes © G.Karras 2011, p.5
Image of page 5

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

View Full Document Right Arrow Icon
Macro Notes © G.Karras 2011, p.6
Image of page 6
Macro Notes © G.Karras 2011, p.7 5.2. The Equilibrium Relationship revisited Closed-Economy Equilibrium: 0 I S I G C Y G I C Y S S S G P   Open-Economy Equilibrium: NX I S NX I G C Y NX G I C Y S S S G P  
Image of page 7

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

View Full Document Right Arrow Icon
Macro Notes © G.Karras 2011, p.8
Image of page 8
Macro Notes © G.Karras 2011, p.9
Image of page 9

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

View Full Document Right Arrow Icon
Macro Notes © G.Karras 2011, p.10 5.3. The Small Open Economy: Equilibrium Open : NX ≠ 0 S I Small : takes the worldwide interest rate, r w , as given Case 1: Suppose r w > r 0
Image of page 10
Image of page 11
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern