In 1990 the Italian current account balance (as a % of GDP) was -1.4% and the...

 

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In 1990 the Italian current account balance (as a % of GDP) was -1.4% and the primary fiscal balance (as a % of GDP) was -1.8%. How can we explain such a phenomenon? Should we expect such an outcome from a theoretical standpoint? Support your answer with the appropriate equations. In 1990 the Italian current account balance (as a % of GDP) was -1.4% and the primary fiscal balance (as a % of GDP) was -1.8%. How can we explain such a phenomenon? Should we expect such an outcome from a theoretical standpoint? Support your answer with the appropriate equations.

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To explain the phenomenon of a negative current account balance and primary fiscal balance in Italy in 1990 we need to understand the factors that con... View the full answer