The Transfer Problem Revisited: Net Foreign Assets and Real Exchange Rates
Philip Lane and
Gian Maria Milesi-Ferretti ()
The Review of Economics and Statistics, 2004, vol. 86, issue 4, 841-857
Abstract:
The relationship between international payments and the real exchange rate-the transfer problem-is a classic question in international economics. We use cross-country data on real exchange rates and a newly constructed data set on countries' net external positions to shed new light on this question. We present a simple theoretical framework that leads to testable implications for the long-run comovements of real exchange rates, net foreign assets, relative GDP and terms of trade, and cross-country and time series evidence on the subject. We show that on average countries with net external liabilities have more depreciated real exchange rates, and that the main channel of transmission seems to be the relative price of nontraded goods, rather than the relative price of traded goods, across countries. © 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Date: 2004
References: Add references at CitEc
Citations: View citations in EconPapers (218)
Downloads: (external link)
http://www.mitpressjournals.org/doi/pdf/10.1162/0034653043125185 link to full text (application/pdf)
Access to full text is restricted to subscribers.
Related works:
Working Paper: The Transfer Problem Revisited: Net Foreign Assets and Real Exchange Rates (2000) 
Working Paper: The Transfer Problem Revisited: Net Foreign Assets and Real Exchange Rates (2000) 
Working Paper: The Transfer Problem Revisited: Net Foreign Assets and Real Exchange Rates (2000) 
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:tpr:restat:v:86:y:2004:i:4:p:841-857
Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535
Access Statistics for this article
The Review of Economics and Statistics is currently edited by Pierre Azoulay, Olivier Coibion, Will Dobbie, Raymond Fisman, Benjamin R. Handel, Brian A. Jacob, Kareen Rozen, Xiaoxia Shi, Tavneet Suri and Yi Xu
More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by The MIT Press ().