Professional Documents
Culture Documents
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2
International Flow of Funds
Chapter Objectives
This chapter will:
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Balance of Payments
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Current Account
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Capital and Financial Accounts
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Exhibit 2.4
2008 Distribution
of U.S. Exports
and Imports
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International Trade Flows
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Events That Increased International Trade
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Trade Frictions - Examples
1. Environmental restrictions
2. Labor laws
3. Bribes
4. Government subsidies
5. Tax breaks
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Trade Policies
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Factors Affecting International Trade Flows
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Limitations of a Weak Home Currency
Solution
1. Counterpricing by competitors
2. Impact of other weak currencies
3. Prearranged international transactions
4. Intracompany trade
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Exhibit 2.6 J-Curve Effect
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Factors Affecting DFI
1. Changes in Restrictions
2. Privatization
3. Potential Economic Growth
4. Tax Rates
5. Exchange Rates
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Exhibit 2.7 Distribution of Global DFI across
Regions in 2007-2008
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Factors Affecting International Portfolio
Investment
1. Tax rates on Interest or Dividends
2. Interest Rates
3. Exchange Rates
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Exhibit 2.8 Impact of the International Flow of Funds on U.S.
Interest Rates and Business Investment in the United States.
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Agencies that Facilitate International Flows
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