Long-Term Capital Movements
Electronic Access:
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Summary:
International financial integration allows countries to become net creditors or net debtors with respect to the rest of the world. In this paper, we show that a small set of fundamentals-shifts in relative output levels, the stock of public debt and demographic factors-can do much to explain the evolution of net foreign asset positions. In addition, we highlight the role that "external wealth" plays in determining the behaviour of the trade balance, and we provide some evidence that a portfolio balance effect exists: real interest rate differentials are inversely related to net foreign asset positions.
Series:
Working Paper No. 2001/107
Subject:
External position Financial services Foreign assets Foreign currency exposure International trade Money Public debt Real interest rates Trade balance
English
Publication Date:
August 1, 2001
ISBN/ISSN:
9781451852981/1018-5941
Stock No:
WPIEA1072001
Pages:
49
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