National income is also called “net national product” (as opposed to “gross national product” [GNP], which includes the depreciation of capital). I will use the expression “national income,” which is simpler and more intuitive. Net income from abroad is defined as the difference between income received from abroad and income paid out to foreigners. These opposite flows consist primarily of income from capital but also include income from labor and unilateral transfers (such as remittances by immigrant workers to their home countries). See the online appendix for details.
