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Do International Investment Income Flows Smooth Income?

Philip Lane

No 2123, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We explore some empirical properties of gross international investment positions. In order to provide income-smoothing, net investment income should negatively covary with GDP. Moreover, to maximize stabilization of GNP in the face of GDP fluctuations, the yield on foreign assets should move countercyclically and the yield on foreign liabilities procyclically. In both time-series and panel settings, we reject these hypotheses,suggesting that positive gross international investment positions are not associated with income-smoothing at business-cycle frequencies.

Keywords: Asset Trade; income-smoothing; international investment income flows; international investment positions (search for similar items in EconPapers)
JEL-codes: F02 F21 F42 G15 (search for similar items in EconPapers)
Date: 1999-03
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Journal Article: Do international investment income flows smooth income? (2001) Downloads
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