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Module Capital Flows and the Balance of Payments KRUGMAN'S MACROECONOMICS for AP* 41 Margaret Ray and David Anderson
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What you will learn in this Module : The meaning of the balance of payments accounts The determinants of international capital flows
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What you will learn in this Module :
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Balance of Payments Accounts Balance of Payments Accounts Current Account Net Exports Trade Balance Factor Income Transfers Financial Account Current/Financial Relationship
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Modeling the Financial Account Modeling the Financial Account Savings will flow toward higher returns r% Q LF USA S LF USA D LF Japan r% Q LF Japan S LF Japan D LF China S LF 1 USA S LF 1 Japan Debit to the US Financial Account or Capital Outflow Credit to the Japanese Financial Account or Capital Inflow
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Underlying Determinants of International Capital Flows Underlying Determinants of International Capital Flows Differences in economic growth rates Differences in savings rates
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Two-way Capital Flows Two-way Capital Flows Capital moves in both directions Differences in individual investor's incentives Financial specialization Countries can be both creditors and debtors simultaneously
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Table 41.1 The Costas’ Financial Year Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition Copyright © 2011 by Worth Publishers
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Figure 41.2 The Loanable Funds Model Revisited Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition Copyright © 2011 by Worth Publishers
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Figure 41.3 Loanable Funds Markets in Two Countries Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition Copyright © 2011 by Worth Publishers
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Figure 41.4 International Capital Flows Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition Copyright © 2011 by Worth Publishers
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Figure 41.1 The Balance of Payments Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition Copyright © 2011 by Worth Publishers
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