How can domestic absorption be reduced

Your Practice. Popular Courses. What Is a Current Account Deficit? Key Takeaways A current account deficit indicates that a country is importing more than it is exporting. Emerging economies often run surpluses, and developed countries tend to run deficits. A current account deficit is not always detrimental to a nation's economy—external debt may be used to finance lucrative investments.

Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. A net exporter is a country or territory whose value of exported goods is higher than its value of imported goods over a given period of time.

What Is a Debtor Nation? A debtor nation has negative net investment after recording all of the financial transactions it has completed worldwide. What Is a Deficit? A deficit occurs when expenses exceed revenues, imports exceed exports, or liabilities exceed assets.

Federal budget deficits add to the national debt. What Is the Net Exports Formula? A nation's net exports are the value of its total exports minus the value of its total imports. The figure also is called the balance of trade. Balance of Trade BOT Definition Balance of trade is the difference between the value of a country's exports and the value of its imports; it is the largest component of a country's balance of payments.

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These choices will be signaled globally to our partners and will not affect browsing data. Advertisement Hide. Absorption Approach to the Balance of Payments. Authors Authors and affiliations David Vines.

Reference work entry First Online: 17 August This is a preview of subscription content, log in to check access. Alexander, S. Effects of devaluation on a trade balance.

Google Scholar. A simplified synthesis of elasticities and absorption approaches. American Economic Review 49, 22— Ball, J. The role of exchange rate change in balance of payments adjustment — the United Kingdom case. Economic Journal 87, 1— CrossRef Google Scholar. Caves, R. Reading in International Economics. Diaz Alexandro, C. Boston: MIT Press. Frenkel, J. The Monetary Approach to the Balance of Payments.

Harberger, A. Currency depreciation, income and the balance of trade. In Caves and Johnson Harrod, R. International Economics. Kyle, J. The Balance of Payments in a Monetary Economy. Princeton: Princeton University Press. Laursen, S. Flexible exchange rates and the theory of employment. Review of Economics and Statistics 32, —