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

By Jocelyn Horne, Paul R Masson, Jeroen J. M. Kremers

April 1, 1993

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Jocelyn Horne, Paul R Masson, and Jeroen J. M. Kremers Net Foreign Assets and International Adjustment: The United States, Japan, and Germany, (USA: International Monetary Fund, 1993) 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

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.

Subject: Balance of payments, Current account, Expenditure, External position, Foreign assets, Foreign currency exposure, Money, Public debt

Keywords: Asset accumulation, Asset stock accumulation, Current account, Current account flow, Debt ratio, Dependency ratio, Equilibrium of the United States, Exchange rate movement, F/Y, Foreign assets, Foreign currency exposure, Germany, GNP, GNP ratio, Ratio, Ratio to GNP, WP, Youth dependency ratio

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1993/033
Stock No:

WPIEA0331993
ISBN:

9781451979244
ISSN:

1018-5941

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