Current account adjustment and retained earnings

Andreas Fischer (), Henrike Leonie Groeger, Sauré, Philip and Yeşin, Pınar
Authors registered in the RePEc Author Service: Philip Ulrich Sauré and Pınar Ayşe Yeşin

No 13142, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper develops a formal strategy to calculate current accounts with retained earnings (RE) on equity investment and analyzes their adjustment during the global financial crisis. RE are the part of companies' profits which are reinvested and not distributed to shareholders as dividends. International statistical standards treat RE on foreign direct investment and RE on portfolio investment differently: while the former enter the current and financial account, the latter do not. We show that this differential treatment strongly affects current accounts of several advanced economies, frequently referred to as financial centers, with large positions in equity (portfolio) investment. Our empirical analysis finds that the differential treatment of RE alters the interpretation of current account adjustment for the global financial crisis.

Keywords: Current account adjustment; Retained earnings; Equity investment; Financial centers (search for similar items in EconPapers)
JEL-codes: F32 F47 G11 (search for similar items in EconPapers)
Date: 2018-08
New Economics Papers: this item is included in nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://cepr.org/publications/DP13142 (application/pdf)

Related works:
Journal Article: Current account adjustment and retained earnings (2019)
Working Paper: Current Account Adjustment and Retained Earnings (2018)
Working Paper: Current account adjustment and retained earnings (2018)
Working Paper: Current account adjustment and retained earnings (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:13142

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP13142

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().