What other measures of integration could have been used here instead 20 points

What other measures of integration could have been

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between 1820 and 1913? What other measures of integration could have been used here instead? (20 points) Integration rose between 1820 and 1913. Interest rate differentials, co-movement of interest rates. The correlation between savings rates and investment rates. b.Give two factors (technological or policy changes) that contributed to the changes observed between 1820 and 1913. (15 points) The telegraph Empire Gold standard.
VERSION B 7c.Explainbriefly what one major economic impact of the changes observed between 1850 and 1914 was. (15 points) Higher capital flows should raise the capital labor ratio and investment raising the marginal product of labor and wages. In short, higher economic growth. It allowed for risk sharing and consumption smoothing. Exposure to capital flows could make some emerging economies more prone to financial crises in the 19thcentury. END OF QUESTION #1 Answer the following questions about the “capital flows” 1.When a country experiences capital inflows what do we know about its trade balance assuming reserves are not changing? Which countries were likely to have trade deficits between 1850 and 1914 and which type of countries would have a surplus? (20 points) EX-IM + Net Capital inflows – (Change in reserves) = 0 If changes in reserves are ignored then a country with capital inflows has a trade deficit. Poor countries or capital scarce countries should have trade deficits and capital inflows. In the 19thcentury capital flowed to resource rich, immigrant receiving areas like Canada, Australia etc.
VERSION B 82.Compare the difference in the evolution of the trade balance (or current account) of Canada and Great Britain between 1880 and 1914. Canada had a deficit while Britain had a surplus. Why did Canada’s current account evolve the way it did compared to Great Britain’s? What is interesting about the magnitudes or size of Canada’s deficit (relative to GDP)? Was there any benefit to Canada from maintaining a deficit? (15 points) Canada had a large current account deficit and Great Britain had a persistent trade surplus. Canada was receiving capital/investment from Britain to develop its railways, harbors and lands for agriculture and mining. Canada’s trade balance was between 3 and 7 percent of GDP which is very large. It implies about a quarter or half of investment would be from foreign investment. Canada was able to augment its capital stock and raise the marginal product of labor thereby raising wages. Also these capital flows and access to British capital would allow for risk-sharing and consumption smoothing.
VERSION B 9END OF EXAM

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