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The data suggest that current account balances are typically countercyclical (i.e., surpluses during recessions, and deficits during booms). According to the DD-AA model, what kinds
The data suggest that current account balances are typically countercyclical (i.e., surpluses during recessions, and deficits during booms). According to the DD-AA model, what kinds of shocks (real or financial) must be driving the cycle (countercyclical/procyclical)? Illustrate your answer by a graph.
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