How Is the Current Account Related to National Saving?(cont. CA=S-I or T=S-CA Countries can finance investment either by saving or by acquiring foreign funds equal to the current account deficit. - a current account deficit implies a financial asset inflow or negative net foreign investment. When S>I,then CA 0 so that net foreign investment and financial capital outflows for the domestic economy are positive. 13-15 Copyright2012 Pearson Education.All rights reserved.Copyright © 2012 Pearson Education. All rights reserved. 13-15 How Is the Current Account Related to National Saving? (cont.) CA = S – I or I = S – CA • Countries can finance investment either by saving or by acquiring foreign funds equal to the current account deficit. – a current account deficit implies a financial asset inflow or negative net foreign investment. • When S > I, then CA > 0 so that net foreign investment and financial capital outflows for the domestic economy are positive