Long-Term Capital Movements

Philip Lane and Gian Maria Milesi-Ferretti ()

No 2001/107, IMF Working Papers from International Monetary Fund

Abstract: International financial integration allows countries to become net creditors or net debtors with respect to the rest of the world. In this paper, we show that a small set of fundamentals-shifts in relative output levels, the stock of public debt and demographic factors-can do much to explain the evolution of net foreign asset positions. In addition, we highlight the role that "external wealth" plays in determining the behaviour of the trade balance, and we provide some evidence that a portfolio balance effect exists: real interest rate differentials are inversely related to net foreign asset positions.

Keywords: WP; asset position; developing country; current account; Net foreign assets; public debt; demographics; capital gain; confidence level; time series; asset trade; nominal rate; least squares; foreign asset position; equity assets; debt forgiveness; rates of return on asset; foreign assets; Foreign assets; Foreign currency exposure; Real interest rates; Trade balance; Global (search for similar items in EconPapers)
Pages: 49
Date: 2001-08-01
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Citations: View citations in EconPapers (150)

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http://www.imf.org/external/pubs/cat/longres.aspx?sk=15262 (application/pdf)

Related works:
Chapter: Long-Term Capital Movements (2002)
Working Paper: Long-Term Capital Movements (2001)
Working Paper: Long-Term Capital Movements (2001)
Working Paper: Long-Term Capital Movements (2001)
Working Paper: Long-Term Capital Movements (2001)
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