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Economic Theory of Bank Credit$
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L. Albert Hahn

Print publication date: 2015

Print ISBN-13: 9780198723073

Published to Oxford Scholarship Online: November 2015

DOI: 10.1093/acprof:oso/9780198723073.001.0001

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Credit and Capital Export

Credit and Capital Export

(p.128) (p.129) [3.]A. Credit and Capital Export
Economic Theory of Bank Credit

L. Albert Hahn

Oxford University Press

This section examines the effects of exports on credit and capital. It shows that a nation exporting goods without importing goods in return is exporting capital (in modern terms the country has a capital account surplus). This capital account surplus can be financed in two ways: the foreign country can pay for the goods in cash or credit is granted. The former will affect the exchange whereas the latter is analogous to domestic credit creation, but with a foreign borrower. Whether or not exporting capital is desirable is analogous to credit expansion in general, and has to be decided on political rather than economic grounds.

Keywords:   export, import, capital account surplus, current account deficit, credit expansion

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