Net Foreign Assets and International Adjustment : The United States, Japan, and Germany

Author/Editor:

Jeroen J. M. Kremers ; Jocelyn Horne ; Paul R Masson

Publication Date:

April 1, 1993

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper examines external adjustment in the United States, Japan and Germany from the perspective of net foreign asset positions. It asks two questions: What are, in the long run, the determinants of net foreign asset equilibrium? and: What are, in the short run, some of the adjustment mechanisms sustaining that equilibrium? An analysis of post-war data produces two insights. First, using a cointegration approach, the existence of long-run net foreign asset equilibrium can be identified: it is a function of demographic variables and public debt. Second, deviations from long-run equilibrium give rise to feedback through different components of domestic absorption in the three countries.

Series:

Working Paper No. 93/33

Subject:

English

Publication Date:

April 1, 1993

ISBN/ISSN:

9781451979244/1018-5941

Stock No:

WPIEA0331993

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

26

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