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Consider Exhibits D and E. A quick note on terminology: A negative current account or deficit in a current account means that money is flowing
Consider Exhibits D and E. A quick note on terminology: A negative current account or deficit in a current account means that money is flowing into a country from abroad: that is, foreign investors invest in a country with a negative current account. A positive current account or surplus in a current account means that money is flowing out of a country. Discuss how the increase in the Spanish debt-to-income ratio between 2000 and 2008 (Exhibit D) and the negative current account before the 2008 Financial Crisis (Exhibit E) are related to the strong house price growth. Suggested response length: 6-8 sentences or 2 paragraphs
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