Download or read book The Stabilizing Role of Net Foreign Asset Returns written by Gustavo Adler and published by International Monetary Fund. This book was released on 2018-04-06 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: With the rapid growth of countries' foreign asset and liability positions over the last two decades, financial returns on those positions ('NFA returns') have become material drivers of current accounts and net stock positions. This paper documents the relative importance of NFA return versus trade channels in driving NFA dynamics, for a sample of 52 economies over 1990-2015. While persistent trade imbalances have been a strong force leading to diverging NFA positions, NFA returns have played an important stabilizing role, mitigating NFA divergence. The stabilizing role of NFA returns primarily reflects the response of asset prices, rather than yield differentials or exchange rates. There is also evidence of heterogeneity in the speed of NFA adjustment, with emerging market economies adjusting more rapidly than advanced economies, and reserve-currency countries adjusting more slowly than others. The paper also documents the role of NFA returns as insurance against domestic and global income shocks, with a focus on reserve-currency countries.
Download or read book The Stabilizing Role of Net Foreign Asset Returns written by Gustavo Adler and published by International Monetary Fund. This book was released on 2018-04-06 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: With the rapid growth of countries' foreign asset and liability positions over the last two decades, financial returns on those positions ('NFA returns') have become material drivers of current accounts and net stock positions. This paper documents the relative importance of NFA return versus trade channels in driving NFA dynamics, for a sample of 52 economies over 1990-2015. While persistent trade imbalances have been a strong force leading to diverging NFA positions, NFA returns have played an important stabilizing role, mitigating NFA divergence. The stabilizing role of NFA returns primarily reflects the response of asset prices, rather than yield differentials or exchange rates. There is also evidence of heterogeneity in the speed of NFA adjustment, with emerging market economies adjusting more rapidly than advanced economies, and reserve-currency countries adjusting more slowly than others. The paper also documents the role of NFA returns as insurance against domestic and global income shocks, with a focus on reserve-currency countries.
Download or read book Stabilization Policies in Developing Countries with a Parallel Market for Foreign Exchange written by Pierre-Richard Agénor and published by International Monetary Fund. This book was released on 1990-03-01 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper develops and tests a model of a developing economy that incorporates trade and capital restrictions, illegal transactions, a parallel foreign exchange market, currency substitution features, and forward-looking rational expectations. Temporary expansionary demand policies are associated with an increase in output and prices, a fall in the stock of net foreign assets, and a depreciation of the parallel exchange rate. The speed of adjustment is inversely related to the degree of rationing in the official foreign currency market. A once-for–all devaluation of the official exchange rate has no long-term effect on the premium.
Download or read book International Financial Adjustment written by Pierre-Olivier Gourinchas and published by . This book was released on 2010 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper proposes a unified framework to study the dynamics of net foreign assets and exchange rate movements. We show that deteriorations in a country's net exports or net foreign asset position have to be matched either by future net export growth (trade adjustment channel) or by future increases in the returns of the net foreign asset portfolio (hitherto unexplored financial adjustment channel). Using a newly constructed data set on US gross foreign positions, we find that stabilizing valuation effects contribute as much as 31% of the external adjustment. Our theory also has asset pricing implications. Deviations from trend of the ratio of net exports to net foreign assets predict net foreign asset portfolio returns one quarter to two years ahead and net exports at longer horizons. The exchange rate affects the trade balance and the valuation of net foreign assets. It is forecastable in and out of sample at one quarter and beyond. A one standard deviation decrease of the ratio of net exports to net foreign assets predicts an annualized 4% depreciation of the exchange rate over the next quarter.
Download or read book A Global Perspective on External Positions written by Philip R. Lane and published by International Monetary Fund. This book was released on 2005-08 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper highlights the increased dispersion in net external positions in recent years, particularly among industrial countries. It provides a simple accounting framework that disentangles the factors driving the accumulation of external assets and liabilities (such as trade imbalances, investment income flows, and capital gains) for major external creditors and debtors. It also examines the factors driving the foreign asset portfolio of international investors, with a special focus on the weight of U.S. liabilities in the rest of the world's stock of external assets. Finally, it relates the empirical evidence to the current debate about the roles of portfolio balance effects and exchange rate adjustment in shaping the external adjustment process.
Download or read book Stabilization Policies in Developing Countries with a Parallel Market for Foreign Exchange written by Pierre-Richard Agenor and published by . This book was released on 2006 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper develops and tests a model of a developing economy that incorporates trade and capital restrictions, illegal transactions, a parallel foreign exchange market, currency substitution features, and forward-looking rational expectations. Temporary expansionary demand policies are associated with an increase in output and prices, a fall in the stock of net foreign assets, and a depreciation of the parallel exchange rate. The speed of adjustment is inversely related to the degree of rationing in the official foreign currency market. A once-forᔚll devaluation of the official exchange rate has no long-term effect on the premium.
Download or read book External Adjustment written by Maurice Obstfeld and published by . This book was released on 2004 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Gross stocks of foreign assets have increased rapidly relative to national outputs since 1990, and the short-run capital gains and losses on those assets can amount to significant fractions of GDP. These fluctuations in asset values render the national income and product account measure of the current account balance increasingly inadequate as a summary of the change in a country's net foreign assets. Nonetheless, unusually large current account imbalances, especially deficits, should remain high on policymakers' list of concerns, even for the richer and less credit-constrained countries. Extreme imbalances signal the need for large and perhaps abrupt real exchange rate changes in the future, changes that might have undesired political and financial consequences given the incompleteness of domestic and international asset markets. Furthermore, of the two sources of the change in net foreign assets -- the current account and the capital gain on the net foreign asset position -- the former is better understood and more amenable to policy influence. Systematic government attempts to manipulate international asset values in order to change the net foreign asset position could have a destabilizing effect on market expectations"--NBER website
Download or read book Economics of Sovereign Wealth Funds written by Mr.Udaibir S. Das and published by International Monetary Fund. This book was released on 2010-12-09 with total page 330 pages. Available in PDF, EPUB and Kindle. Book excerpt: The book covers a wide range of topics of relevance to policymakers in countries that have sovereign wealth funds (SWFs) and those that receive SWF investments. Renowned experts in the field have contributed chapters. The book is organized around four themes: (1) the role and macrofinancial linkages of SWFs, (2) institutional factors, (3) investment approaches and financial markets, and (4) the postcrisis outlook. The book also discusses the challenges facing sovereign wealth funds in the coming years, from an inside perspective on countries, including Canada, Chile, China, Norway, Russia, and New Zealand. Economics of Sovereign Wealth Funds will contribute to a further understanding of the nature, strategies and behavior of SWFs and the environment in which they operate, as their importance is likely to grow in the coming years.
Download or read book Japan s Foreign Assets and Liabilities Implications for the External Accounts written by Mariana Colacelli and published by International Monetary Fund. This book was released on 2021-02-05 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: The composition of Japan’s current account balance has changed over time, with an increasing income balance primarily reflecting a growing net foreign asset position and higher corporate saving. A comparison of Japan’s income balance with peer countries highlights: (i) relatively high yields on FDI assets, and (ii) very low FDI liabilities in Japan. Panel estimation is used to derive separate exchange rate elasticities for income credit and debit, with novel accounting that disentangles the mechanical from the economic response to exchange rate fluctuations. Despite the changing composition of Japan’s current account balance, its response to exchange rate movements still operates mostly through the traditional trade channel, with a small but reinforcing contribution from the income balance.
Download or read book International Reserves and Foreign Currency Liquidity written by International Monetary Fund. Statistics Dept. and published by International Monetary Fund. This book was released on 2015-01-07 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt: This update of the guidelines published in 2001 sets forth the underlying framework for the Reserves Data Template and provides operational advice for its use. The updated version also includes three new appendices aimed at assisting member countries in reporting the required data.
Download or read book Europe and Global Imbalances written by Philip R. Lane and published by International Monetary Fund. This book was released on 2007-06 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although Europe in the aggregate is a not a major contributor to global current account imbalances, its trade and financial linkages with the rest of the world mean that it will still be affected by a shift in the current configuration of external deficits and surpluses. We assess the macroeconomic impact on Europe of global current account adjustment under alternative scenarios, emphasizing both trade and financial channels. Finally, we consider heterogeneous exposure across individual European economies to external adjustment shocks.
Download or read book Sustaining Economic Growth in Asia written by Jeremie Cohen-Setton and published by Peterson Institute for International Economics. This book was released on 2018-12-01 with total page 494 pages. Available in PDF, EPUB and Kindle. Book excerpt: Economic growth, inflation, and interest rates have declined in Asia, just as they have in the United States and Europe. This volume explores the relevance to several Asian economies of the diagnosis known as “secular stagnation.” Leading experts on the region discuss the fiscal and monetary policy challenges of reviving growth without generating domestic financial imbalances. The essays on innovation, demographics, spillovers, and various policy proposals are accompanied by case studies focusing on Japan, South Korea, China, India, and Indonesia.
Download or read book Confronting South Korea s Next Crisis written by Jaejoon Woo and published by Oxford University Press. This book was released on 2022 with total page 647 pages. Available in PDF, EPUB and Kindle. Book excerpt: South Korea's economic miracle is a well-known story. However, today Korea is confronting a new set of internal and external risks, which may foreshadow the next crisis. The Korean economy has been struggling with the faltering growth momentum and the rise of unprecedented socio-economic problems over recent years well before the pandemic crisis. After abrupt downshifts to markedly slower growth in the early 2000s, economic growth has continued to decelerate. Koreans are grappling with slow income growth, all time-high household debt, high youth unemployment, inequality, and social polarization. Politics is in disarray and is incapable of directing social discourse for the common good. Rapid population aging along with the world's lowest fertility rates stokes fears of Japanification. Simultaneously, disruptive technologies and fast-changing business environment such as the rise of China clash with a range of long-standing structural problems. The contemporary challenges are radically different from those seen in the early stages of industrialization. There are multiple risks that threaten to self-perpetuate low or stagnant growth over the next decade or so, if not an outright financial crisis. Motivated by these latest developments, this book seeks to provide a timely and in-depth analysis of key current issues and foreseeable challenges of the economy, with a provocative reassessment of its future. Based on extensive new empirical works, it examines the underlying causes of the socio-economic problems. In a constructive spirit, it puts in perspective what would constitute critical elements of ideal policy solutions and the direction of the future government's role.
Download or read book G7 Current Account Imbalances written by Richard H. Clarida and published by University of Chicago Press. This book was released on 2007-11-01 with total page 518 pages. Available in PDF, EPUB and Kindle. Book excerpt: The current account deficit of the United States is more than six percent of its gross domestic product—an all-time high. And the rest of the world, including other G7 countries such as Japan and Germany, must collectively run current account surpluses to finance this deficit. How long can such unevenness between imports and exports be sustained, and what form might their eventual reconciliation take? Putting forth scenarios ranging from a gradual correction to a crash landing for the dollar, G7 Current Account Imbalances brings together economists from around the globe to consider the origins, status, and future of those disparities. An esteemed group of collaborators here examines the role of the bursting of the dot-com bubble, the history of previous episodes of current account adjustments, and the possibility of the Euro surpassing the dollar as the leading international reserve currency. Though there are areas of broad agreement—that the imbalances will ultimately decline and that currency revaluations will be part of the solution—many areas of contention remain regarding both the dangers of imbalances and the possible forms of adjustment. This volume will be of tremendous value to economists, politicians, and business leaders alike as they look to the future of the G7 economies.
Download or read book Exchange Rate Assessments written by Mr.Jaewoo Lee and published by International Monetary Fund. This book was released on 2008-04-07 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: The rapid increase in international trade and financial integration over the past decade and the growing importance of emerging markets in world trade and GDP have inspired the IMF to place stronger emphasis on multilateral surveillance, macro-financial linkages, and the implications of globalization. The IMF's Consultative Group on Exchange Rate Issues (CGER)--formed in the mid-1990s to provide exchange rate assessments for a number of advanced economies from a multilateral perspective--has therefore broadened its mandate to cover both key advanced economies and major emerging market economies. This Occasional Paper summarizes the methodologies that underpin the expanded analysis.
Download or read book Global Financial Shocks and Foreign Asset Repatriation written by Gustavo Adler and published by International Monetary Fund. This book was released on 2014-04-16 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the dynamic response of gross capital flows in emerging market economies to different global financial shocks, using a panel vector-autoregressive (PVAR) setting. Our focus lies primarily on the potentially stabilizing role played by domestic investors in offsetting the response of foreign investors to global shocks. We find evidence of such role, but its existence and magnitude depend on the nature of the shock. Local investors play a meaningful stabilizing role in the face of global uncertainty shocks, as well as shocks to long-term U.S. interest rates. However, while in the former case, sizeable asset repatriation largely offsets the retrenchment of non-residents, in the latter case the extent of the offsetting is much more limited. Meanwhile, residents and non-resident behave alike in response to short-term U.S. interest rate shocks, pulling capital away from emerging markets, although magnitudes are not economically significant. The results shed light on the potential impact of the Fed’s QE tapering on emerging market economies.
Download or read book Brookings Papers on Economic Activity 1 2005 written by William C. Brainard and published by Brookings Institution Press. This book was released on 2010-12-01 with total page 366 pages. Available in PDF, EPUB and Kindle. Book excerpt: Brookings Papers on Economic Activity (BPEA) provides academic and business economists, government officials, and members of the financial and business communities with timely research on current economic issues.
