Net foreign assets and international adjustment: the United States, Japan and Germany

Paul R. Masson*, Jeroen Kremers, Jocelyn Horne

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

23 Citations (Scopus)

Abstract

This paper examines external adjustment in the USA, 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? 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.

Original languageEnglish
Pages (from-to)27-40
Number of pages14
JournalJournal of International Money and Finance
Volume13
Issue number1
DOIs
Publication statusPublished - 1994

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