External Stability: CAD, Net Foreign Debt and Net Foreign Equity

What this note covers

1. External Stability as a Macroeconomic Objective
2. The Current Account Deficit: Structure and Causes
3. Net Foreign Debt: Definition, Accumulation, and Measurement
4. Net Foreign Equity: Definition and the Role of Foreign Direct Investment
5. How Persistent CADs Accumulate Net Foreign Liabilities
6. The Primary Income Deficit: The Ongoing Cost of Net Foreign Liabilities
7. Assessing Sustainability and Policy Implications

7 sections · 14 key terms & formulas · 6 common mistakes