Write an expression for the future value of the stock

Assignment Help Microeconomics

Reference no: EM131479938

Question: Using the assumptions and answers from the previous question, complete the following:

a. Write an expression for the future value of the stock of external wealth in period N (WN). This should be written as a function of the economy's trade balance (TB) each period, the real interest rate r*, and initial external wealth.

b. Using the answer from (a), write an expression for the present value of the stock of external wealth in period N (WN).

c. The "no Ponzi game" conditions force the present value of WN to tend to zero as N gets large. Explain why this implies that the economy's initial external wealth is equal to the present value of future trade deficits.

d. How would the expressions in parts (a) and (b) change if the economy had net labor income (positive or negative) to/from abroad or net unilateral transfers? Explain briefly.

Reference no: EM131479938

Questions Cloud

Protected from packet sniffing : If you use a moble device, but connect with the cell tower wireless instead of the classroom's LAN, are you protected from packet sniffing?

How the study of ethics applies to business : Audi presents an account of how the study of ethics applies to business.

Decrease his expected payment per repair job : Assume that Bob does not want to decrease his expected payment per repair job. What is the maximum amount per job that Bob would be willing to pay Bill?

What is the main difference between audio and video elements : What is the main difference between audio and video elements? What are the different types of selectors in CSS? What are font properties?

Write an expression for the future value of the stock : Write an expression for the future value of the stock of external wealth in period N (WN). This should be written as a function of the economy's trade balance.

Review the perfect builders case study : ICT310 - System Analysis and Design - Review the Perfect Builders case study and answer the following question with reference to the information in the case study.

Describe briefly the different types of network messages : Describe briefly the different types of network messages. Briefly explain how you know that the host computer was placed on the correct subnet.

What is the total payoff from the projects in future years : In this question, assume all dollar units are real dollars in billions, so, for example, $150 means $150 billion. It is year 0. Argentina thinks it can find $15

Describe alternatives to current sex offender legislation : Provide a conclusion you drew about the effectiveness of sex offender legislation as it relates to sex offender management.

User Account

All Pages