Consider a small open economy that is running a large trade surplus, of approximately 15% of GDP. In this economy, the government is contemplating a large corporate income tax reform, to better align corporate income taxes with the rest of the world, and to limit incentives for firms to locate activity abroad. In what follows we will denote by r the level of world interest rates, and by r^c the interest rate that would prevail if the country were a closed economy and had a no trade surplus. (a) Is r bigger than, smaller than, or equal to r^c? How would you expect r to change after the reform? (5 points)