Chapter 10 (External Stability) 10.1 - 10.2 Summary

10.1 - IntroductionExternal Stability

Main External Stability Issues

persistent CADvolatile terms of tradeAustralia's lack of international competitivenessgrowth of foreign debtrising foreign ownership in Australia
volatility of the Australian dollar

10.1 Summary
10.2 - Australia's CADIntroduction
Key measure
How to measure current account
Australia's CAD as a % of GDP
Main discussion of measuring CAD
Structural and cyclical

The CAD as a trade deficit
Australia's international competitiveness
Commodity price changes
Cost issues from lack of international competitiveness
and Non-cost issues
Terms of trade as an indicator
Strong terms of trade

The CAD as a savings-investment gap
What is a savings-investment gap
Australia's persistent CAD and need for capital inflow
Capital inflow problem
What this will do to the CAD

The 'Consenting Adults' Thesis (The Pitchford Thesis)
Pitchford thesis
CAD and foreign liabilities source
This thesis and its effects in the past
Australia's performance from the above