国际金融英文课件2【ppt】.ppt

The macro meaning of the current account balance A country’s current account balance equals the country’s net foreign investment (CA=If). When all the flows for current uses as goods, services, income and gifts have been netted out, what is left is the increase in all of the foreign financial assets minus all of the country’s foreign liabilities. The only things being exchanged between nations are goods, services, income, gifts, and financial assets. If all credits must equal all debits, then the balance on goods, services, income and gifts—that is the current account surplus must equal net foreign investment (If), the net accumulation of foreign assets minus foreign liabilities. The macro meaning of the current account balance A country’s current account balance equals national saving that is not invested at home (CA=S—Id). The CA balance is linked to its national saving and domestic investment. A country can do two things with its national saving (S): Invest at home in domestic capital formation, which is domestic investment (Id). Invest abroad in net foreign investment (If). That is national saving S= Id +If. Looked at another way, the country’s net foreign investment equals the difference between national saving and domestic investment (If=S-Id) The macro meaning of the current account balance A country’s current account balance (which is approximately equal to a country’s net export) is the difference between its domestic production of goods and services and its total expenditure on goods and services (CA = X—M =Y– E). The current account balance is linked to domestic production, income, and expenditure. Recall from basic macroeconomics that domestic production of goods and services (Y) equals the demand for the country’s production. The macro meaning of the current account balance Y = C + Id +G+X-M Where: C = domestic household consumption of goods and services Id = domestic real investment in buildings, equipment, and inventories G =Government spending