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External Wealth, the Trade Balance, and the Real Exchange Rate

This paper examines the link between the net foreign asset position, the trade balance and the real exchange rate. In particular, it decomposes the impact of a country's net foreign asset position ("external wealth") on its long-run real exchange rate into two mechanisms: the relation...

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Bibliographic Details
Main Author: Lane, Philip
Other Authors: Milesi-Ferretti, Gian
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2002
Series:IMF Working Papers
Subjects:
Government And The Monetary System
Payment Systems
Investments, Foreign
Balance Of Trade
Terms Of Trade
Monetary Economics
Currency; Foreign Exchange
Regimes
Economic Policy; Nternational Cooperation
Trade Balance
Long-term Capital Movements
Exports And Imports
International Economics
Foreign Assets
Foreign Exchange
Standards
Monetary Systems
Real Exchange Rates
Foreign Exchange Market
Foreign Currency Exposure
Empirical Studies Of Trade
Money And Monetary Policy
International Investment
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:This paper examines the link between the net foreign asset position, the trade balance and the real exchange rate. In particular, it decomposes the impact of a country's net foreign asset position ("external wealth") on its long-run real exchange rate into two mechanisms: the relation between external wealth and the trade balance; and, holding other determinants fixed, a relation between the trade balance and the real exchange rate. It also provides additional evidence that the relative price of nontradables is an important channel linking the trade balance and the real exchange rate
Physical Description:35 pages
ISBN:9781451847123

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