Author
Abstract
The progression of financial globalization increases the importance of valuation changes of foreign assets and liabilities, similar to that of current account in explaining the recent net foreign asset position of countries around the world. This study analyzes the long‐term determinants of valuation effects by using panel regression with 10‐year data span of 188 countries. The main findings are as follows. First, the size of foreign assets and relative portion of risky assets are positively associated with valuation effects, which suggests that general principles for long‐term individual investors also hold for an entire country. Second, current account is negatively associated with valuation effects, which suggests that these two mechanisms stabilize each other in overall international adjustment process. Third, exchange rate changes are often positively associated with valuation effects, which at times depend on foreign asset and liability positions. Fourth, per capita GDP are negatively associated with valuation effects. Fifth, current account is mainly associated with valuation effects due to asset price changes, but exchange rate changes and foreign asset and liability positions are mainly associated with valuation effects due to exchange rate changes. The relative proportion of risky assets is associated with both types of valuation effects.
Suggested Citation
Soyoung Kim & Kyunghee Min, 2023.
"Long‐term determinants of valuation effects,"
Review of International Economics, Wiley Blackwell, vol. 31(3), pages 985-1031, August.
Handle:
RePEc:bla:reviec:v:31:y:2023:i:3:p:985-1031
DOI: 10.1111/roie.12651
Download full text from publisher
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:reviec:v:31:y:2023:i:3:p:985-1031. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576 .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.