IMF Working Papers

Long-Term Capital Movements

By Philip R. Lane, Gian M Milesi-Ferretti

August 1, 2001

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Philip R. Lane, and Gian M Milesi-Ferretti. Long-Term Capital Movements, (USA: International Monetary Fund, 2001) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: External position, Financial services, Foreign assets, Foreign currency exposure, International trade, Money, Public debt, Real interest rates, Trade balance

Keywords: Asset position, Asset trade, Capital gain, Confidence level, Current account, Debt forgiveness, Demographics, Developing country, Equity assets, Foreign asset position, Foreign assets, Foreign assets, Foreign currency exposure, Global, Least squares, Net foreign assets, Nominal rate, Public debt, Rates of return on asset, Real interest rates, Time series, Trade balance, WP

Publication Details

  • Pages:

    49

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2001/107

  • Stock No:

    WPIEA1072001

  • ISBN:

    9781451852981

  • ISSN:

    1018-5941

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