External Stability (1 Viewer)

[Newbie]

what would be your definition of this?

each textbook is telling me a different one

 

[timmii]

Hmmmm maybe something along the lines of: "A sustainable current account deficit, exports being able to finance imports and a stable exchange rate."

 

[numg]

Would a sustainable CAD include foriegn debt? or would u put that separately?

 

[timmii]

It's up to you i suppose. Depends on whether you subscribe to the notion that foreign debt itself is not a problem as long as it is being used to improve domestic productive capacity...

Or you can phrase external stability as maintaining a sustainable CAD to ensure Australia's capacity to meet its overseas obligations as well as a stable exchange rate???

I just used what ever definition suited how I wanted to answer the question

 

[Newbie]

thanks timmii

 

[Hiya_la]

btw wat is the CAD currently.. is it around $42.5bn?
wat is that as a percentage of gdp?

 

[malayz_angel]

Is knowing the amount of the CAD important? And I think it is somewhere around the 42 billion mark

 

[timmii]

I think knowing the % of GDP is far more important. The problem of unsustainabiliy is derived from CAD exceeding 5% of GDP rather than some arbitrary nominal figure. I think its at about 6% at the moment?