{
  "title": "The Measurement of External Accounts",
  "publication": "IMF Working Papers, June 28, 2019",
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  "summary": "Growing international integration in trade and finance can challenge the measurement of external accounts. This paper presents a unified conceptual framework for identifying sources of mismeasurement of foreign investment income in current account balances.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Authors: Gustavo Adler, Daniel Garcia-Macia, Signe Krogstrup\n- Date: June 28, 2019\n- Paper series: IMF Working Papers; Working Paper No. 2019/132\n- Core summary:\n  - Growing international integration in trade and finance can challenge the measurement of external accounts.\n  - The paper presents a unified conceptual framework to identify sources of mismeasurement of foreign investment income in current account balances.\n  - The framework yields a precise definition of measurement distortions and an empirical strategy to estimate their importance.\n  - As an application, two specific distortions related to inflation and retained earnings on portfolio equity are empirically estimated for a broad set of countries.\n  - Findings indicate these distortions may explain a non-trivial share of current account imbalances and are particularly relevant in countries with large external investment positions.\n  - The paper also discusses how merchanting and profit-shifting activities could produce measurement distortions.\n  - The authors suggest areas for future research and underline the need to strengthen data collection efforts."
    },
    {
      "heading": "Conceptual framework and empirical strategy",
      "content": "- Purpose:\n  - Provide a unified conceptual framework for identifying sources of mismeasurement of foreign investment income in current account balances.\n- Outputs of the framework:\n  - A precise definition of measurement distortions.\n  - An empirical strategy for estimating the importance of these distortions."
    },
    {
      "heading": "Empirical application and key findings",
      "content": "- Distortions empirically estimated:\n  - Inflation-related distortion on foreign investment income.\n  - Retained earnings distortion on portfolio equity.\n- Scope:\n  - Estimated for a broad set of countries.\n- Main empirical findings:\n  - These two distortions may explain a non-trivial share of current account imbalances.\n  - Distortions are particularly relevant in countries with large external investment positions."
    },
    {
      "heading": "Other potential measurement distortions discussed",
      "content": "- Merchanting activities as a potential source of measurement distortion.\n- Profit-shifting activities as a potential source of measurement distortion."
    },
    {
      "heading": "Policy recommendations and research agenda",
      "content": "- Strengthen data collection efforts to better measure foreign investment income and reduce measurement distortions.\n- Areas suggested for future research (as discussed by the authors):\n  - Further exploration of inflation-related measurement issues.\n  - Deeper analysis of retained earnings and portfolio equity accounting across jurisdictions.\n  - Investigation of merchanting and profit-shifting channels and their measurement implications.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2019/06/28/the-measurement-of-external-accounts-46949"
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    "Authors: Gustavo Adler, Daniel Garcia-Macia, Signe Krogstrup",
    "Published: June 28, 2019",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781498317450.001",
    "Authors: Gustavo Adler, Daniel Garcia-Macia, Signe Krogstrup",
    "Date: June 28, 2019",
    "Paper series: IMF Working Papers; Working Paper No. 2019/132",
    "Core summary:",
    "Purpose:",
    "Outputs of the framework:",
    "Distortions empirically estimated:",
    "Scope:",
    "Main empirical findings:",
    "Merchanting activities as a potential source of measurement distortion.",
    "Profit-shifting activities as a potential source of measurement distortion.",
    "Strengthen data collection efforts to better measure foreign investment income and reduce measurement distortions.",
    "Areas suggested for future research (as discussed by the authors):",
    "**Working Paper**"
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