Net Foreign Assets and International Adjustment : The United States, Japan, and Germany

This paper examines external adjustment in the United States, 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? and: 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.
Publication date: April 1993
ISBN: 9781451979244
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International - Economics , Globalization , net foreign assets , foreign assets , foreign asset , net foreign asset , foreign asset positions

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