6. The levels of saving and investment of a large open economy affect the world real interest rate. In a model of two large open economies, the equilibrium real interest rate in the international capital market is the rate at which desired international lending by one country equals desired international borrowing by the other country. Equivalently, it is the rate at which the lending country's current account surplus equals the borrowing country's current account deficit. Any factor that increases desired national saving or reduces desired investment at the initial interest rate for either large country will increase the supply of interna- tional loans relative to the demand and cause the world real interest rate to fall.