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How to calculate Current Account Balance (International Macroeconomics)

 
 
Flo3
 
Reply Sat 11 Feb, 2017 06:36 am
Hi,

I was wondering if someone can help me with the following:

I have to work with an Overlapping Generations Model modeling one country only. It also involves the calculation of the current account balance of that country.
Now, in some papers and the common literature the current account balance is defined as the difference of net foreign assets in (t+1) and net foreign assets in (t). While some define it as the difference in net foreign assets in (t+1) and net foreign assets plus its interests in (t).

Can please someone explain me, why some authors take the income on net foreign assets into account for the calculations of current account balance and some don't?

I hope the information is enough. However, please do not hesitate to comment my post if you need more information.

Thank you very much.

Best,
Florian
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