For the following questions, assume that both net unilateral transfers and net factor payments from abroad are equal to 0. Further, let the United States represent the domestic country and Japan represent the foreign country.

As the baby boomers in a domestic country are aging, they are realizing that they haven't saved nearly enough money to retire on. So they have started increasing their savings rate. What is the short run effect on the interest rate, output, and net exports in both the domestic and foreign country?