Why does a temporary increase in government spending cause the current account to fall by a smaller

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Why does a temporary increase in government spending cause the current account to fall by a smaller amount than does a permanent increase in government spending?

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International Economics Theory and Policy

ISBN: 978-0273754206

9th Edition

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz

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Question Posted: Oct 24, 2012 11:45 PM

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Why does a temporary increase in government spending cause the current account to fall by a smaller

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Figure can be used to show that any permanent fiscal expansion worsens the current account In this d...View the full answer

International Economics Theory and Policy

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