In a two-period SOE model with production, an increase in current domestic total factor productivity

Question

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An increase in domestic total factor productivity (TFP) leads to an increase in the marginal product of both labor and capital, which leads to an increase in domestic output. As output rises, exports will increase and imports will decrease, leading to an increase in the current account surplus. Therefore, an increase in current domestic TFP will increase domestic output and increase the current account surplus.

In a Two-Period SOE Model with Production, an Increase in Current