Long-Term Capital Movements

Author/Editor:

Philip R. Lane ; Gian M Milesi-Ferretti

Publication Date:

August 1, 2001

Electronic Access:

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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:

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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