International settlement first review

International Settlement<br /> FIRST REVIEW<br /> <br /> Dr. Nguyen Minh Duc<br /> <br /> Capital movement<br /> <br /> <br /> Capital market of country A<br /> has its demand curve of D<br /> and interest r on the left side<br /> <br /> <br /> <br /> Capital market of country B<br /> has its demand curve of D*<br /> and interest r* on the right<br /> side<br /> <br /> <br /> <br /> Suppose A has 30 mil. USD<br /> in its capital, B has 10 mil.<br /> USD, represented by the<br /> relative supply curve S/S*<br /> <br /> <br /> <br /> Interest rate in A is 4% and<br /> in B is 12%.<br /> <br /> r*<br /> <br /> r<br /> <br /> S/S*<br /> <br /> 12%<br /> <br /> 8%<br /> <br /> 4%<br /> D*<br /> 0<br /> <br /> D<br /> 20<br /> <br /> 30<br /> <br /> K<br /> <br /> 0*<br /> K*<br /> <br /> Thị trường vốn thế giới<br /> <br /> Dr Nguyen Minh Duc 2009<br /> <br /> 2<br /> <br /> Capital movement<br /> <br /> r*<br /> <br /> r<br /> <br /> S/S*<br /> <br /> 12%<br /> <br /> 8%<br /> <br /> 4%<br /> D*<br /> 0<br /> <br /> D<br /> 20<br /> <br /> 30<br /> <br /> K<br /> <br /> With mobilized<br /> capital flow<br /> between 2<br /> countries, the<br /> interest rates in<br /> the two countries<br /> will approach to<br /> their equilibrium at<br /> 8%<br /> <br /> 0*<br /> K*<br /> <br /> Thị trường vốn thế giới<br /> <br /> Dr Nguyen Minh Duc 2009<br /> <br /> 3<br /> <br /> Question<br />  How<br /> <br /> the free trade and globalization<br /> affect the Vietnamese capital market?<br /> <br /> Dr Nguyen Minh Duc 2009<br /> <br /> 4<br /> <br /> Balance of Payment<br /> BOT + TS<br /> BGS + NII<br /> CA + KA = BOP<br /> DI + PI<br /> <br /> Dr Nguyen Minh Duc 2009<br /> <br /> 5<br /> <br />