Hi everyone,
So…
NCO = Acquisition of foreign assets by residents – Acquisition of domestic assets by nonresidents
“Acquisition of foreign assets by residents” translates to me to Imports (M), and “Acquisition of domestic assets by nonresidents” translates to me to Exports (X).
Reading from the internet and CFA curriculum itself, if Net Exports increase, NCO increase too.
To me, if Net exports increase (X increases, and M stays constant or decreases or increases at a lower rate), then it means are acquiring less foreign assets, and non residents are acquiring more domestic assets. So NX and NCO should be inversely related.
Can someone please help?
Thanks