Author: Ha Minh NguyenPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Valuation Effects and External Adjustment
Author: Ha Minh NguyenThe Valuation Channel of External Adjustment
Author: Mr.Fabio GhironiPublisher: International Monetary Fund
ISBN: 1451874200
Category : Business & Economics
Languages : en
Pages : 46
Book Description
International financial integration has greatly increased the scope for changes in a country's net foreign asset position through the valuation channel, namely capital gains and losses on external assets and liabilities. We examine this valuation channel in a dynamic equilibrium portfolio model with international trade in equity. By separating asset prices and quantities, we can characterize the first-order dynamics of valuation effects and the current account in macroeconomic dynamics. Specifically, we disentangle the roles of excess returns, capital gains, and portfolio adjustment for consumption risk sharing when financial markets are incomplete.
Valuation Effects and External Adjustment
Author: Pierre-Olivier GourinchasPublisher:
ISBN:
Category : Equilibrium (Economics)
Languages : en
Pages : 31
Book Description
External Adjustment
Author: Maurice ObstfeldPublisher:
ISBN:
Category : Balance of trade
Languages : en
Pages : 64
Book Description
"Gross stocks of foreign assets have increased rapidly relative to national outputs since 1990, and the short-run capital gains and losses on those assets can amount to significant fractions of GDP. These fluctuations in asset values render the national income and product account measure of the current account balance increasingly inadequate as a summary of the change in a country's net foreign assets. Nonetheless, unusually large current account imbalances, especially deficits, should remain high on policymakers' list of concerns, even for the richer and less credit-constrained countries. Extreme imbalances signal the need for large and perhaps abrupt real exchange rate changes in the future, changes that might have undesired political and financial consequences given the incompleteness of domestic and international asset markets. Furthermore, of the two sources of the change in net foreign assets -- the current account and the capital gain on the net foreign asset position -- the former is better understood and more amenable to policy influence. Systematic government attempts to manipulate international asset values in order to change the net foreign asset position could have a destabilizing effect on market expectations"--NBER website
External Adjustment, Global Imbalances and Valuation Effects
Author: Pierre-Olivier GourinchasPublisher:
ISBN:
Category : Balance of payments
Languages : en
Pages : 68
Book Description
We provide an overview of the recent developments of the literature on the determinants of long term capital flows, global imbalances and valuation effects. We present the main stylized facts of the new international financial landscape in which external balance sheets of countries have grown in size and discuss implications for the international monetary and financial system.
The Valuation Channel of External Adjustment
Author: Jaewoo LeePublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
International financial integration has greatly increased the scope for changes in a country''s net foreign asset position through the valuation channel, namely capital gains and losses on external assets and liabilities. We examine this valuation channel in a dynamic equilibrium portfolio model with international trade in equity. By separating asset prices and quantities, we can characterize the first-order dynamics of valuation effects and the current account in macroeconomic dynamics. Specifically, we disentangle the roles of excess returns, capital gains, and portfolio adjustment for consumption risk sharing when financial markets are incomplete.
Global Imbalances and External Adjustment after the Crisis
Author: Mr.Philip R. LanePublisher: International Monetary Fund
ISBN: 149836361X
Category : Business & Economics
Languages : en
Pages : 45
Book Description
This paper has two objectives. First, it reviews the recent dynamics of global imbalances (both “flow” and “stock” imbalances), with a special focus on the shifting position of Latin America in the global distribution. Second, it examines the cross-country variation in external adjustment over 2008-2012. In particular, it shows how pre-crisis external imbalances have strong predictive power for post-crisis macroeconomic outcomes, allowing for variation across different exchange rate regimes. We emphasize that the bulk of external adjustment has taken the form of “expenditure reduction”, with “expenditure switching” only playing a limited role.
An Asset-pricing View of External Adjustment
Author: Anna PavlovaPublisher:
ISBN:
Category : Economic stabilization
Languages : en
Pages : 60
Book Description
Recent evidence on the importance of cross-border equity flows calls for a rethinking of the standard theory of external adjustment. We introduce equity holdings and portfolio choice into an otherwise conventional open-economy dynamic equilibrium model. Our model is simple and admits a closed-form solution regardless of whether financial markets are complete or incomplete. We find that the excessive emphasis put in the literature on solving models with incomplete markets for the sole purpose of obtaining nontrivial implications for the current account is misplaced. We revisit the current debate on the relative importance of the standard vs. the capital-gains-based (or "valuation'') channels of the external adjustment and establish that in our framework they are congruent. Our model's implications are consistent with a number of intriguing stylized facts documented in the recent empirical literature.
Author: Fabio Ghironi
Author: Huiran Pan