Problem
Find data for Gross Domestic Investment and Gross Domestic Savings both in percent of GDP for Indonesia and the US for the years 2010-2015 and plot it. The current account balance equals the difference between these two:
CA Balance = (Gross Dom. Savings) / (Gross Dom. Investment)
How much did each of the two components contribute to the changes in the current account balance during this period in each country?
How did government fiscal policy, by running budget deficits or surpluses contribute to this in each country? Hint: To answer this question, remember the relationship between government deficits and national savings.
Explain the reasoning behind your answer.
|
%of GDP
|
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
|
Indonesia GDI
|
32.88
|
32.984
|
35.072
|
33.831
|
34.568
|
34.562
|
|
Indonesia GDS
|
33.582
|
33.173
|
32.415
|
30.648
|
31.479
|
32.494
|
|
US GDI
|
18.394
|
18.545
|
19.351
|
19.548
|
19.921
|
20.238
|
|
US GDS
|
15.086
|
15.689
|
17.711
|
18.239
|
18.831
|
18.734
|
|
Indonesia CA Balance
|
|
|
|
|
|
-2.068
|
|
US CA Balance
|
|
|
|
|
|
-1.504
|
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.