Equation (12-2) tells us that to reduce a current account deficit, a country must increase its private
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Equation (12-2) tells us that to reduce a current account deficit, a country must increase its private saving, reduce domestic investment, or cut its government budget deficit. Nowadays, some people recommend restrictions on imports from China (and other countries) to reduce the American current account deficit. How would higher U.S. barriers to imports affect its private saving, domestic investment, and government deficit? Do you agree that import restrictions would necessarily reduce a U.S. current account deficit?
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International Economics Theory & Policy
ISBN: 9780138002121
8th Edition
Authors: Paul R Krugman, Maurice Obstfeld
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