Net Foreign Assets and International Adjustment: The United States, Japan, and Germany

Jocelyn Horne, Paul Masson and Jeroen Kremers

No 1993/033, IMF Working Papers from International Monetary Fund

Abstract: This paper examines external adjustment in the United States, Japan and Germany from the perspective of net foreign asset positions. It asks two questions: What are, in the long run, the determinants of net foreign asset equilibrium? and: What are, in the short run, some of the adjustment mechanisms sustaining that equilibrium? An analysis of post-war data produces two insights. First, using a cointegration approach, the existence of long-run net foreign asset equilibrium can be identified: it is a function of demographic variables and public debt. Second, deviations from long-run equilibrium give rise to feedback through different components of domestic absorption in the three countries.

Keywords: WP; Germany; GNP; F/Y; ratio; GNP ratio; debt ratio; equilibrium of the United States; dependency ratio; asset accumulation; asset stock accumulation; youth dependency ratio; exchange rate movement; ratio to GNP; current account flow; Foreign assets; Foreign currency exposure; Current account (search for similar items in EconPapers)
Pages: 26
Date: 1993-04-01
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Citations: View citations in EconPapers (9)

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Journal Article: Net foreign assets and international adjustment: The United States, Japan and Germany (1994)
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