Question
In the two-period model of the Current Account (CA) for a Small Open Economy (SOE) with no investment, explain: a)Why the SOE can benefit from
In the two-period model of the Current Account (CA) for a Small Open Economy (SOE) with no investment, explain:
a)Why the SOE can benefit from the financial capital mobility. (40%)
b)What is the effect on the CA of an increase in the international interest rate if this SOE is a net borrower in period 1? (60%)
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Microeconomics
Authors: Jeffrey M. Perloff
8th edition
134519531, 978-0134519531
