Global imbalances and the external solvency of nations

Arbeitspapier

Global current account imbalances were a major subject of concern in the years before the recent financial crisis. It is shown that the expected (negative) equilibrium relationship between net foreign assets and the trade balance that had held in the previous twenty years appeared to break down in this period. The explosion of the magnitude and equity component of cross-border assets and liabilities has made net foreign assets much harder to track, and may have introduced significant measurement errors and/or bubble effects into the series. The structural break is not evident if net property income flows are used in place of net foreign assets. This suggests that net exports do indeed adjust so as to maintain external solvency in the long run.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CREDIT Research Paper ; No. 14/02

Classification and Topics

• Classification: Wirtschaft ; Foreign Exchange
• Subject: current account ; exchange rates ; net foreign assets ; trade balance

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bleaney, Michael ; Tian, Mo
• Event: Veröffentlichung
• (who): The University of Nottingham, Centre for Research in Economic Development and International Trade (CREDIT)
• (where): Nottingham
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/126446
• Last update: 10.03.2025, 11:42 AM CET