International Capital Flows and Debt Dynamics

 
Author/Editor: Evans, Martin D. D.
 
Publication Date: July 01, 2012
 
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Summary: This paper presents a new model for studying international capital flows and debt dynamics that emphasizes the role played by expectations concerning future trade flows and returns. I use the model to estimate the drivers of the U.S. external position and capital flows between 1973 and 2008. The estimates show that most of the secular rise in U.S. international indebtedness is attributable to growing optimism about future returns on U.S. holdings of foreign equity and FDI assets. They also show that the transformation of world savings into risky assets by the U.S. had little effect on its external position, but the expected future real depreciation of the dollar allowed the U.S. to sustain a higher level of international debt after the 1990s.
 
Series: Working Paper No. 12/175
Subject(s): Capital flows | Economic models | External debt | Foreign direct investment | International trade | United States

Author's Keyword(s): Capital Flows | External Imbalances | International Debt | International Solvency | Exorbitant Privilege
 
English
Publication Date: July 01, 2012
Format: Paper
Stock No: WPIEA2012175 Pages: 58
Price:
US$18.00 (Academic Rate:
US$18.00 )
 
 
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