CAD- Pitchford (1 Viewer)

[SBHS4EVER]

Can you guys help us out with info on the Pitchford Thesis?

 

[BMWM3]

what is the pitchford thesis my teacher hasn't taught me it

 

[chunder]

the pitchford theory is either:

(a) increasing CAD is irrelevant as improved economic fundamentals helps an economy to cope with the trend.

or

(b) increasing CAD isn't a problem as it is contributing to economic growth and development.


one of the above is the pitchford theory whilst the other is the consenting adult's theoru.

 

[marsenal]

Does the pitchford theory have something to do with the fact that foreign debt is now dominated by the private sector, so we shouldn't really worry about it?

 

[yeahyeahyeahs]

I'm a bit fuzzy on this one but the CAD isnt a big problem since it reflects increasing investment into Australia which helps us grow in the long run and hence isnt such a bad thing.

 

[marsenal]

Ok I knew I had something about this somewhere:

The "Pitchford Thesis" argues that private businesses borrow money because they believed it would be profitable to do so.
This thesis implies that because the public sector's share of the foreign debt is declining there is no need for the government to be concerned about the foreign debt and should not be adopting policies to deal with it and the CAD.

This is taken directly from Stokes

 

[malayz_angel]

Pitchford? Yeah...that rings a bell. He's the best example of the CAD not necessarily being a bad thing. It's pretty much what every1 else said...it's easily handled because a) it's effects are cyclical and b) it puts money to Australia which can be used to improve our resources and exports. It's good for essays because a lot of ppl just go on about how terrible the CAD is for Australia.