European Parliament Library

Where did all the borrowing go?, a forensic analysis of the U.S. external position, Philip R. Lane and Gian Maria Milesi-Ferretti

Label
Where did all the borrowing go?, a forensic analysis of the U.S. external position, Philip R. Lane and Gian Maria Milesi-Ferretti
Language
eng
Bibliography note
Includes bibliographical references
Illustrations
illustrations
Index
no index present
Literary Form
non fiction
Main title
Where did all the borrowing go?
Nature of contents
bibliographydictionaries
Responsibility statement
Philip R. Lane and Gian Maria Milesi-Ferretti
Series statement
IMF Working Paper
Sub title
a forensic analysis of the U.S. external position
Summary
The deterioration in the U.S. net external position in recent years has been much smaller than the extensive net borrowing associated with large current account deficits would have suggested. This paper examines the sources of discrepancies between net borrowing and accumulation of net liabilities for the U.S. economy over the past 25 years. In particular, it highlights and quantifies the role played by net capital gains on the U.S. external portfolio and 'residual adjustments' in explaining this discrepancy. It discusses whether these 'residual adjustments' are likely to be originating
Table Of Contents
Contents; I. Introduction; II. Preliminaries; A. Dynamics of the Net Foreign Asset Position: A Benchmark Decomposition; B. Data and Empirical Methodology; III. The International Investment Position: Key Features; A. Valuation Gains and Net External Position; B. Components of the International Balance Sheet; IV. Zero Residual Scenarios; A. Method: New Estimates with Re-Allocated Data; B. Residual as capital gain; C. A more general illustrative scenario; D. Sensitivity Analysis; V. Conclusions; References; Figures; 1. Net International Investment Position and Cumulative Financial Outflows2. Net International Investment Position and Cumulative Valuation-Adjusted Financial Outflows3. U.S. IIP: Stock-Flow Residual; 4. Decomposition of Stock-Flow Residual; 5. Implications of Alternative Scenarios for Net Foreign Asset Position; Tables; 1. The Dynamics of the U.S. International Investment Position, 1976-2006; 2. Price and Exchange Rate Valuation Effects, 1983-2006; 3. The Importance of Residual Adjustments, 1983-2006; 4. Portfolio Assets and Liabilities: Stock-Flow Reconciliation; 5. Foreign Direct Investment: Stock-Flow Reconciliation6. Holdings of Banks and Non-Banks: Stock-Flow Reconciliation7. Rates of Capital Gain; 8. Net Impact of Residual "Re-Allocation" on External Position, Capital Flows, and Valuation