55 – Daniel Griswold on the Basics of Trade
Macro Musings with David Beckworth
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Understanding the Current Account Balance in International Transactions
The chapter explains the components of the current account balance in international transactions, contrasting it with the financial account and highlighting how the current account deficit in America is balanced by the financial account. It delves into the relationship between domestic savings, investment, and the inflow of foreign capital into the United States. The conversation discusses the impact of buying goods from other countries on exchange rates, trade deficits, and the influence of capital flows on the strength of the dollar.
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