- UID
- 222307
- 帖子
- 669
- 主题
- 24
- 注册时间
- 2011-7-2
- 最后登录
- 2016-1-10
|
My way to understand difference is example of filling soda in a cup. When soda is poured, first few seconds level is higher, then level goes down slightly as froth subsides.
Same way, say economy A is expanding, capital is attracted, currency A rises above equilibrium level (established by Capital flows method). During that time imports become cheaper and so exceeds exports so current a/c becomes deficit to balance Capital a/c surplus. Once it balances, imports reduces and currency A retreats to equilibrium level. This explanation is Savings-Investment Imbalance approach. |
|