ch13 (4) - To understand lending and borrowing we need to...

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To understand lending and borrowing we need to look at transactions in assets to complete our study of the Balance of Payments. Figure 16.7: Saving, Investment, and Current Account Trends: Industrial Countries The charts show saving, investment, and the current account as a percent of GDP for four groups of industrial countries. The United States has seen both saving and investment fall since the 1970s, but saving has fallen further than investment, opening up a large current account deficit approaching 6% of GDP in 2004. Japan’s experience is the opposite: investment fell further than savings, opening up a large current account surplus of about 3% to 4% of GDP. The Euro area has also seen saving and investment fall but has been closer to balance and has recently run a small surplus of about 0.5% of GDP. Other industrial countries (e.g., non-Euro area EU countries, Canada, Australia, and so on) ran large current account deficits in the 1970s and 1980s but have recently moved toward surplus.
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