An Asset-pricing View of External Adjustment - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook An Asset-pricing View of External Adjustment write by Anna Pavlova. This book was released on 2007. An Asset-pricing View of External Adjustment available in PDF, EPUB and Kindle. 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.
Asset-Pricing View of External Adjustment
Asset-Pricing View of External Adjustment - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Asset-Pricing View of External Adjustment write by . This book was released on 2007. Asset-Pricing View of External Adjustment available in PDF, EPUB and Kindle.
External Adjustment
External Adjustment - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook External Adjustment write by Maurice Obstfeld. This book was released on 2004. External Adjustment available in PDF, EPUB and Kindle. "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
The Valuation Channel of External Adjustment
The Valuation Channel of External Adjustment - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook The Valuation Channel of External Adjustment write by Mr.Fabio Ghironi. This book was released on 2009-12-01. The Valuation Channel of External Adjustment available in PDF, EPUB and Kindle. 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.
The Valuation Channel of External Adjustment
The Valuation Channel of External Adjustment - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook The Valuation Channel of External Adjustment write by Mr. Jaewoo Lee. This book was released on 2009-12-01. The Valuation Channel of External Adjustment available in PDF, EPUB and Kindle. 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.
