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Unwinding external stock imbalances? The case of Italy�s net international investment position

Valerio Della Corte, Stefano Federico and Enrico Tosti ()

No 446, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper is a case study of an (almost complete) adjustment of Italy�s external stock imbalance. After reaching a peak of around 25 per cent of GDP in early 2014, Italy�s net external debtor position has steadily decreased, reaching less than 7 per cent of GDP at the end of 2017. The contribution of this work is twofold. First, it reviews the main developments in Italy�s net international investment position (NIIP) since 1999. Second, it reports a baseline projection of Italy�s NIIP over a medium-term horizon, as implied by current account balance forecasts. Since this projection ignores the role of valuation adjustments, the study also provides an analysis of their sensitivity to a set of potential movements in exchange rates and equity or bond markets.

Keywords: international investment position; stock imbalances; valuation adjustments; current account (search for similar items in EconPapers)
JEL-codes: F21 F32 F34 F36 (search for similar items in EconPapers)
Date: 2018-07
New Economics Papers: this item is included in nep-acc and nep-eec
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