Question: There are two and only two countries in the world: Argentina and Chile. There is perfect free trade between the two. The aggregate investments in

There are two and only two countries in the world: Argentina and Chile. There is perfect free trade between the two. The aggregate investments in Argentina are given by I^A and in I^C there both are exogenous. The savings are due to the following context:

S^A = A + ar,

where A, a > 0 for Argentina and for Chile it is given by S^C that is exogenous.

1. Find the equilibrium interest rate.

2. Derive the condition for Argentina to be a net exporter.

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