Suppose that a good productivity shock hits a small open economy, and that the productivity shock is
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Question:
Suppose that a good productivity shock hits a small open economy, and that the productivity shock is very persistent. First make an argument whether the current account of this economy improves or deteriorates in responding to the shock. Second, explain the current account movement (Hint: all three views must be consistent with each other).
Related Book For
Macroeconomics
ISBN: 978-0321675606
6th Canadian Edition
Authors: Andrew B. Abel, Ben S. Bernanke, Dean Croushore, Ronald D. Kneebone
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