Question: P 1. A negative productivity shock leads to a current account deficit. Discuss this statement using a simple intertemporal model (2-period model). Examine first the

deficit." Discuss this statement using a simple intertemporal model (2-period model). Examine

1. "A negative productivity shock leads to a current account deficit." Discuss this statement using a simple intertemporal model (2-period model). Examine first the case when the shock is transitory and second, the case when the shock is permanent. Assume that initial foreign debt is zero

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