3 Responses to Current Account = Savings – Investment

  1. engin December 6, 2012 at 4:30 pm #

    Suppose domestic saving is insufficient to finance Domestic investment. How will the domestic investment be financed?

    It will be financed by investment from abroad. These capital flows are a credit on the capital account and will be matched by a deficit on the current account.

    I don’t understand,
    “””””These capital flows are a credit on the capital account and will be matched by a deficit on the current account.”””””

    Only I will take credit for my investment. why will be matched by deficit on the current account??????

  2. shal June 5, 2013 at 2:36 pm #

    this is exellent explanation

Trackbacks/Pingbacks

  1. Balance of Payments Disequilibrium | Economics Help - February 10, 2014

    […] The current account can also be seen as an imbalance between domestic savings and domestic investment. If domestic saving is lower than domestic investment, then we will see a current account deficit. The excess domestic investment will be financed by capital inflows from abroad. See: Current account = Saving – investment […]

Optimization WordPress Plugins & Solutions by W3 EDGE