Slides Chapter1 Global Imbalances

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  Slides for Chapter 1:Global Imbalances International Macroeconomics  Schmitt-Groh´e Uribe Woodford Columbia UniversityJanuary 22, 2018 1  International Macroeconomics, Chapter 1  Schmitt-Groh´e, Uribe, Woodford Motivation Countries trade a lot with one another, and the United States is noexception. This fact elicits a number of questions, such as ã  How big are international transactions in goods, services, andfinancial assets for the United States and other countries? ã  Does the United States have a trade deficit or a trade surpluswith the rest of the world? What about China, Europe, and LatinAmerica? ã  Is the United States an external debtor or an external creditor? ã  How have the trade balance and the international asset positionof the United States and other countries evolved over time?This chapter addresses these and other related questions. 2  International Macroeconomics, Chapter 1  Schmitt-Groh´e, Uribe, Woodford Overview The main focus of the present chapter is descriptive. In laterchapters, we will ask more positive questions such as ã  Why are exports of goods and services larger or smaller thanimports of goods and services? ã  Why do countries borrow from abroad? ã  Can countries borrow forever? ã  What determines the size of a country’s external debt? 3  International Macroeconomics, Chapter 1  Schmitt-Groh´e, Uribe, Woodford The International Transactions Accounts In the United States international transactions are recorded by theBureau of Economic Analysis ( in the  InternationalTransactions Accounts  (ITA), also known as the  Balance of Payments .An important figure produced in the ITA is the  Trade Balance ,which measures the difference between exports of goods and servicesand imports of goods and services:Goods Balance = Exports of Goods  −  Imports of GoodsService Balance = Exports of Services  −  Import of ServicesTrade Balance = Goods Balance + Service BalanceExamples of traded goods: textiles, oil, cars, and wheat.Examples of traded services: education, and medical care, consulting. 4

Lecture 1

Oct 8, 2019
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