Intermediate Macroeconomics Lecture 13
1 Intermediate Macroeconomics Lecture 13
The Open Economy a Why do countries trade with each other? No nation was ever ruined by trade Benjamin Franklin More varieties, higher quality; cheaper price
2 The Open Economy ◼ Why do countries trade with each other? “No nation was ever ruined by trade.” --- Benjamin Franklin More varieties; higher quality; cheaper price
The Open economy a Imports and exports as a of GDP(2002) 160 HK 140 120 a cao 100 80 60 france 40 Japan 20 「m China germany India Korea, U.K. ep EX/GDP口IM/GDP
3 The Open Economy ◼ Imports and exports as a % of GDP (2002) France H K Japan Macao U.S. 0 2 0 4 0 6 0 8 0 100 120 140 160 China Germany India Korea, Rep. U.K. EX/GDP IM/GDP
The Open Economy a The international flows of capital goods a Savings and investment in a small open economy ■ Exchange rates Large open economy
4 The Open Economy ◼ The international flows of capital & goods ◼ Savings and investment in a small open economy ◼ Exchange rates ◼ Large open economy
International flows of k& goods ■ National Identity y=C+l+gu+eX C=Cd+C′I=7+1G=G+G Y=(C-C)+(-1)+(G-G)+EX Y=C++G+EX-(C+/+G′) Y=C+l+g+EX-M Y=C+l+g+NX
5 International Flows of K & Goods ◼ National Identity Y C I G EX d d d = + + + d f C = C +C d f I = I + I d f G = G + G Y C C I I G G EX f f f = ( − ) + ( − ) + ( − ) + ( ) f f f Y = C + I +G + EX − C + I +G Y =C+ I +G+ EX − IM Y =C+ I +G+ NX