One of the reasons for our on-going current account deficit is because we've always been a "capital-importing country" needing capital of foreigners to help us exploit our many investment opportunities.
if our CAD is over -5% of GDP than the economy is seen as unsustainable since it represents a constraint on economic growth
australia has very little impact on the global economy, but the global economy has a huge impact on us.
foriegn ivestment in australia is twice as much as australian investment overseas. this will have an affect on net capital inflow which produces a surplus in the capital account, which also offsets the Current account
1) Dr. Ken Herny predicts Australia's CAD to get even bigger in the next few years. Does this mean we're doomed for a debt sustainability problem/debt trap?
2)Why do people in the United States save so little and spend so much of their income on consumption?
3)What is microeconomic reform and why does it make our economy more "flexible"?
1) The current account deficit doesn't seem that bad... 2) If the CAD continues to grow will this have adverse effects on our economy even if it is mainly investment spending causing it? 3) What is "roll over risk"?
1. "needing the capital of foreigners to help us exploit our many investment opportunities."
ReplyDeleteWho's exploiting what?
2. So does it mean when CAD becomes unsustainable, it blows up and becomes a GFC like the US?
3. US dollar stays low, cheaper imports for us! yessss..
The reason for our current account deficit is because our import of goods and services tend to exceed our exports.
ReplyDeleteOne of the reasons for our on-going current account deficit is because we've always been a "capital-importing country" needing capital of foreigners to help us exploit our many investment opportunities.
ReplyDeleteThe US has to now save more, consume less, produce more and import less due to their very LARGE budget deficits
ReplyDeleteSIR, WHY ARE YOU LEAVING?!?!?! :'( why do this to us......?
ReplyDeleteTo minimize our large CAD, Australia should practice in manufactering goods and services which are normally imported
ReplyDeleteif our CAD is over -5% of GDP than the economy is seen as unsustainable since it represents a constraint on economic growth
ReplyDeleteaustralia has very little impact on the global economy, but the global economy has a huge impact on us.
foriegn ivestment in australia is twice as much as australian investment overseas. this will have an affect on net capital inflow which produces a surplus in the capital account, which also offsets the Current account
1) Dr. Ken Herny predicts Australia's CAD to get even bigger in the next few years. Does this mean we're doomed for a debt sustainability problem/debt trap?
ReplyDelete2)Why do people in the United States save so little and spend so much of their income on consumption?
3)What is microeconomic reform and why does it make our economy more "flexible"?
1) The current account deficit doesn't seem that bad...
ReplyDelete2) If the CAD continues to grow will this have adverse effects on our economy even if it is mainly investment spending causing it?
3) What is "roll over risk"?