<p>So we have
<span class="math-container">$$S^A = I^A + NX^A $$</span>
<span class="math-container">$$S^B = I^B + NX^B $$</span>
where <span class="math-container">$S^A$</span> and <span class="math-container">$S^B$</span> are exogenous constants. And since there are only two countries we have
<span class="math-container">$$NX^A = -NX^B $$</span>
which leads to
<span class="math-container">$$S^A - I^A = -( S^B - I^B ) $$</span>
Use that last equation to solve for r (after plugging in the I formulas). Then solve the first equation and require that <span class="math-container">$NX^A$</span> be positive.</p>

CC BY-SA 4.0
2021-01-12T17:19:53.943Z
Nice. Thank you that makes sense. So when I have found r I just plug 
the expression for r in, in:  $$NX^A>0 \Leftrightarrow S^A-I^A>0 \Leftrightarrow  S^A>I^A=A-ar$$. And then I have found the condition that Albania is a net exporter?
Lifeni
CC BY-SA 4.0
2021-01-12T17:04:47.260Z
2021-01-12T17:04:47.260Z
Daniel
<p>We assume that we have two and only two contries: Albania and Bulgaria. There is complete free trade between the two countries.</p>
<p>The aggregate investments in Albania are given by:
<span class="math-container">$$I^A=A-ar$$</span>
where <span class="math-container">$A, a &gt;0$</span> and r real interest rates.</p>
<p>The aggregate investments in Bulgaria are given by:
<span class="math-container">$$I^B=B-br$$</span>
where <span class="math-container">$B, b &gt;0$</span> and r real interest rates.</p>
<p>They have total savings <span class="math-container">$S^A$</span> and <span class="math-container">$S^B$</span> who are independent of the interest rate.</p>
<p>Now I have to derive the condition that Albania is a net exporter.</p>
<p>My though so far is that I have to use that BNP(Y): <span class="math-container">$$Y=C+I+G+NX$$</span> and <span class="math-container">$$S_A=publicsavings+privatesavnings=(T-G)+(Y-T-C)=Y-C-G$$</span> and that <span class="math-container">$NX&gt;0$</span>. But when I use these can only find an expression of the form <span class="math-container">$S_A&gt;f(A,a,r)$</span>. But I think I have to find an expression of the form <span class="math-container">$S_A&gt;f(A,a,B,b,r)$</span>. Can someone help me?</p>

CC BY-SA 4.0
2021-01-12T05:41:08.100Z
Question:  Is total savings defined as  S = Y - C - G  ?
Daniel
CC BY-SA 4.0
2021-01-12T09:37:23.520Z
Yes spot on. While we have that $S_A=publicsavings+privatesavning=(T-G)+(Y-T-C)=Y-C-G$. But when I use this I also just get an expression of the form $_>(,,)$. Can you help me to find the right expression?
Lifeni
<macroeconomics><microeconomics><gdp>
A world only with two contries (net exporter)
Lifeni
# A world only with two contries (net exporter)

(Asked by: username_0 on 2021-01-11)

We assume that we have two and only two contries: Albania and Bulgaria. There is complete free trade between the two countries.

The aggregate investments in Albania are given by:
$$I^A=A-ar$$
where $A, a >0$ and r real interest rates.

The aggregate investments in Bulgaria are given by:
$$I^B=B-br$$
where $B, b >0$ and r real interest rates.

They have total savings $S^A$ and $S^B$ who are independent of the interest rate.

Now I have to derive the condition that Albania is a net exporter.

My though so far is that I have to use that BNP(Y): $$Y=C+I+G+NX$$ and $$S\_A=publicsavings+privatesavnings=(T-G)+(Y-T-C)=Y-C-G$$ and that $NX>0$. But when I use these can only find an expression of the form $S\_A>f(A,a,r)$. But I think I have to find an expression of the form $S\_A>f(A,a,B,b,r)$. Can someone help me?

**Tags:** macroeconomics, microeconomics, gdp

> **Comments:**
> **username_1**: Question:  Is total savings defined as  S = Y - C - G  ?  
> **username_0**: Yes spot on. While we have that $S_A=publicsavings+privatesavning=(T-G)+(Y-T-C)=Y-C-G$. But when I use this I also just get an expression of the form $_>(,,)$. Can you help me to find the right expression?  

---

## 1 answers

### Answer by username_1 on 2021-01-12. Score: 3

So we have
$$S^A = I^A + NX^A $$
$$S^B = I^B + NX^B $$
where $S^A$ and $S^B$ are exogenous constants. And since there are only two countries we have
$$NX^A = -NX^B $$
which leads to
$$S^A - I^A = -( S^B - I^B ) $$
Use that last equation to solve for r (after plugging in the I formulas). Then solve the first equation and require that $NX^A$ be positive.

> **Comments:**
> **username_0**: Nice. Thank you that makes sense. So when I have found r I just plug  the expression for r in, in:  $$NX^A>0 \Leftrightarrow S^A-I^A>0 \Leftrightarrow  S^A>I^A=A-ar$$. And then I have found the condition that Albania is a net exporter?  

---

