Dynamics of net foreign asset components in the EMU

Tatiana Cesaroni and Roberta de Santis ()

No 5, Working Papers from Department of the Treasury, Ministry of the Economy and of Finance

Abstract: In the last two decades, foreign capital investments have followed different paths in EMU countries. Given their importance for growth and productivity, we analyse the factors underlying the dynamics of foreign direct investments, portfolio debt investments, and portfolio equity investments in EMU countries over the years 1996-2014. We assess how the heterogeneous behavior between core and peripheral countries can be related to macroeconomic factors (business cycle, trade, financial openness and spreads) and institutional quality. Our results show that financial integration as well as interest rates spread had an impact on the main components of foreign assets which was different between core and peripheral countries. In EMU countries as a whole we find a statistical significant relationship between institutional quality and foreign capital components, which is entirely driven by core countries.

Keywords: Net international investment positions; PEI; FDI and PDI; Institutional quality; Euro area (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Pages: 28
Date: 2017-09
New Economics Papers: this item is included in nep-eec and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Dynamics of net foreign asset components in the EMU (2018)
Journal Article: Dynamics of net foreign asset components in the EMU (2018)
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