slidesca1 - Current Account as Share of GDP 1.00% 0.00% 04...

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Current Account as Share of GDP -6.00% -5.00% -4.00% -3.00% -2.00% -1.00% 0.00% 1.00% 1 96 0 4 196 8 197 2 6 198 1988 199 1996 2000 2004
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Components of Current Account Deficit, 1946-2004
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US Net International Investment Position (share of GDP)
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U.S. Net Foreign Assets, relative to GDP 1952:1 to 2004:1
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Net Valuation Component (relative to GDP) CA NFA *
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Consumption over Time and the Current Account C 2 A C C 1 Y Y r 1 2 1 + + () 1 12 ++ rY Y CY r C Y 22 1 1 1 =− + ( ) Y 1 YA C 1 −= Y 2 C 2 CA 1
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Adding Investment C 2 B* C* A* Y 1 C 1 C 1
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Two Country Model r r S r a r S r a S H Home S S F Foreign S
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Global Equilibrium with Investment r r I S I S r A* r* r A I H S H S,I (home) S F I F S,I (foreign)
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A Decrease in Foreign Savings r r I IS I H S H S,I (home) S F I F S,I (foreign) * 0 S * 1 S * 1 a r W r 0 ) ( F F H H I S I S = W r 1
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Current Account Balances by Major Grouping -$800 -$600 -$400 -$200 $0 $200 $400 1997 1998 1999 2000 2001 2002 2003 2004 2005 Billions of Dollar s Advanced Economies Other Emerging Market and Developing Economies US Statistical Discrepancy
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World Current Account Balance, 1980-1993 -160 -140 -120 -100 -80 -60 -40 -20 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 Billions of US Dollars
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Production Function y k β Ak
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Transition to Steady State Equilibrium k t+1 45 o k t k k ) ( 1 t t k G k = +
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Autarkic Equilibrium k t+1 45 o Japan US k t k J k J k k
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