Valuation effect as a determinant of the international investment position in Central and Eastern European economies

Sobański, Konrad

doi:10.12775/equil.2015.030

Cited by 3 publications

(1 citation statement)

References 6 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The link between the NIIP and the current (or trade) balance was examined by Forbes (2016), Śliwiński (2011; 2008), Lane and Milesi-Ferretti (2001). Empirical research concerning changes in NIIP determinants draws also a great deal of attention to the valuation effect resulting, for example, from price and exchange rates changes (Forbes, 2016;Sobański, 2015;EBC, 2014;Śliwiński, 2011;Devereux, Sutherland, 2010;Higgins, Klitgaard, Tille, 2006). Other lines of research related to determinants of the NIIP are focused on determinants of net capital flows and external debt (Cyrus, Iscan, Starky, 2009;Lane, 2000).…”

Section: Introductionmentioning

confidence: 99%

Short and Long Term Determinants of the Net International Investment Position Resulting from the Balance of Payments of the European Monetary Union Countries

Śliwiński

2018

Folia Oeconomica

View full text Add to dashboard Cite

The paper aims at analysing the level, composition and factors determining changes of the net international investment position (NIIP) of the euro area countries. Although the improvement in the euro area’s NIIP during the period from 2Q2012 to 2Q2016 was largely driven by current account surpluses in 13 out of 19 countries, there is a visible difference between the NIIP changes and their components in the surplus and deficit countries. The group of net foreign assets countries increased its position primarily by running current account surpluses reflecting mainly a positive balance on goods and, on a minor scale, a positive primary income balance. The NIIP in the group of net foreign liabilities countries deteriorated although the cumulative current accounts were in surplus for this period. Here, the current account improvement was largely driven by services which, in contrast to the net foreign asset countries, were in surplus. In turn, the cumulative primary income in the group of net foreign liabilities countries was in minus. Statistical analysis aimed at estimation of determinants of the changes in the NIIPs over the subsequent quarters shows that their short term behaviour was on a large scale positively driven by the changes of valuation effect resulting, for example, from exchange rates and prices movements. It should not be surprising that the signs which indicate the direction of valuation effect on the NIIP pattern are different in the short and long term. It should be stressed that the valuation effect influence decreases over time since valuation gains and losses overlap and largely neutralise each other. Nevertheless, combined losses were higher than total gains and therefore its impact on the NIIP was negative in the analysed period. On the other hand, the EMU current account surpluses were repetitive and persistent, being the main factor behind the improvement of the cumulative euro area NIIP changes.

show abstract