Define national saving as private saving

Assignment Help Econometrics

Reference no: EM131133265

The U.S. trade deficit, current account deficit and investment

a. Define national saving as private saving plus the government surplus-i.e., as S + T - G. Now, using equation (19.5), describe the relation among the current account deficit, net investment income, and the difference between national saving and domestic investment.

b. Go to the statistical tables of the most recent Economic Report of the President (www.gpoaccess.gov/eop/). In Table B-1, "Gross Domestic Product," retrieve annual data for GDP, gross domestic investment, and net exports from 1980 to the most recent year available. Divide gross domestic investment and net exports by GDP for each year to express their values as a percentage of GDP.

c. The trade surplus in 1980 was roughly zero. Subtract the value of net exports (as a percentage of GDP) in 1981 from the value of net exports (as a percentage of GDP) in the most recent year available. Do the same for gross domestic investment. Has the decline in net exports been matched by an equivalent increase in investment? What do your calculations imply about the change in national saving between 1981 and the present?

d. When the United States began experiencing trade deficits during the 1980s, some officials in the Reagan administration argued that the trade deficits reflected attractive investment opportunities in the United States. Consider three time periods: 1981 to 1990, 1990 to 2000, and 2000 to the present. Apply the analysis of part (c) to each of these time periods (i.e., calculate the change in net exports and gross domestic investment as a percentage of GDP). How does the change in net exports from the 1980 values compare to the change in investment during each period? How did national saving change during each period?

e. Is a trade deficit more worrisome when not accompanied by a corresponding increase in investment? Explain your answer.

f. The question above focuses on the trade deficit rather than the current account deficit. How does net investment income (NI) relate to the difference between the trade deficit and the current account deficit in the United States? Find Table B-103 "U.S. International Transactions" from the Economic Report of the President. Use your work in part (b) to calculate NI as a percent of GDP. Is this value rising or falling over time? What is the implication of such changes?

Reference no: EM131133265

Questions Cloud

How do the issues luther present for debate : Martin Luther wrote these propositions in order to engage in a debate with fellow theologians. How do the issues Luther present for debate illustrate the problems in the Church of his day?

Prepare presentation on history of us army rank and insignia : Prepare a powerpoint presentation on the HISTORY OF THE UNITED STATES ARMY RANK AND INSIGNIA.This must be a well thought out and planned presentation to a class.

Describe where and how you acquired the necessary skills : Describe where and how you acquired the necessary skills that helped you excel through the progression of your education. Be sure to include examples.

How topic relates to one academic and professional pursuits : To help prepare for your Final Research Project, write an annotated bibliography to indicate the quality of the sources you have read. The bibliography must include no less than five scholarly sources that will be used to support the major points ..

Define national saving as private saving : Is a trade deficit more worrisome when not accompanied by a corresponding increase in investment? Explain your answer.

Write a research paper on monopoly and the robber barons : Write a RESEARCH PAPER ON "MONOPOLY AND THE ROBBER BARONS". The paper should include a thesis statement with information gained from research or investigation.

Discuss factors that generate a growing colonial challenge : Identify and discuss three factors that helped generate a growing colonial challenge to British rule during the period from the mid-1760's to the mid-1770s.

What were some of the topics luther raised : Identify the basic causes, both political and religious, of the bitter struggles of the sixteenth and seventeenth centuries in France, the Holy Roman Empire, and the Netherlands. Describe the political and religious dimensions of the settlement of..

Trying to determine its cost of debt : Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 15 years to maturity that is quoted at 107 percent of face value. The issue makes semiannual payments and has an embedded cost of 7 percent annually ..

User Account

All Pages