Global Imbalances with Safe Assets in Eurozone

Hung Ly-Dai

MPRA Paper from University Library of Munich, Germany

Abstract: In one open two-country economy, a higher domestic productivity level raises both mean and variance of wealth dynamic, and can lead to a greater accumu- lation of safe assets. The empirical evidences on the 19 countries of Eurozone confirm that the safe assets exchange supports the international risk-sharing across countries. Moreover, in comparison with the risky investments (FDI and Portfolio Equities), the safe assets (Bonds) are the dominant driver of global imbalances within Eurozone.

Keywords: Current Account; Endogenous Portfolio Choice; Safe Assets; Productivity Level (search for similar items in EconPapers)
JEL-codes: F21 F32 F41 (search for similar items in EconPapers)
Date: 2014-06, Revised 2018-05
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:90238

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