Template-type: ReDif-Paper 1.0
Author-Name: Holinski Nils 
Author-Name: Kool Clemens 
Author-Name: Muysken Joan 
Author-workplace-name: METEOR
Title: International Portfolio Balance – Modeling the External Adjustment Process
Abstract: Unprecedented growth in private cross-border asset trade and asymmetric internationalbalance sheets are well-documented stylized facts of financial integration. Moreover, weobserve that current accounts are no longer the number one determinant of external balances. Advancing the work of Blanchard et al. (2005), this paper develops a portfolio-balance model that recognizes these stylized facts and shows how they influence the joint dynamics of the current account, the exchange rate and relative asset prices. Calibrating the model to the external adjustment process of the US, the model produces results that are broadly consistent with recent empirical trends. In particular, we find that the composition of its international balance sheet helps the US to better cope with external shocks.
Keywords: international economics and trade ; 
Series: Research Memoranda
Creation-Date: 2009
Number: 033
File-URL: http://arnop.unimaas.nl/show.cgi?fid=15861
File-Format: application/pdf
File-Size: 515076
Handle: RePEc:unm:umamet:2009033