Long-Term Capital Movements

Philip Lane and Gian Maria Milesi-Ferretti ()

No 8366, NBER Working Papers from National Bureau of Economic Research, Inc

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 that external wealth' plays a critical role in determining the behavior of the trade balance, both through shifts in the desired net foreign asset position and the investment returns generated on the outstanding stock of net foreign assets. Finally, we provide some evidence that a portfolio balance effect exists: real interest rate differentials are inversely related to net foreign asset positions.

JEL-codes: F21 F34 (search for similar items in EconPapers)
Date: 2001-07
New Economics Papers: this item is included in nep-ifn
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (139)

Published as Long-Term Capital Movements , Philip R. Lane, Gian Maria Milesi-Ferretti. in NBER Macroeconomics Annual 2001, Volume 16 , Bernanke and Rogoff. 2002
Published as Philip R. Lane & Gian Maria Milesi-Ferretti, 2001. "Long-Term Capital Movements," NBER/Macroeconomics Annual, vol 16(1), pages 73-116.

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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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