Answer to Question #101678 in Macroeconomics for mariense21

Question

Considering the definition current account as changes in the country's net foreign assets (NFA) position: CA (t) = ΔNFA (t) = B(t)- B (t-1) = X(t) -M (t) + rB(t-1), where B (t-1) is the stock of net foreign assets at the beginning of the period. Assuming that interest rate r is constant and so is the growth rate of income, g= Y (t)/ Y(t-1) -1 derive the relationship between the CA and NFA in steady-state.

Answer 1

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