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Nominal exchange rates and net foreign assets' dynamics : the stabilization role of valuation effects.

Eugeni, Sara (2017) 'Nominal exchange rates and net foreign assets' dynamics : the stabilization role of valuation effects.', Working Paper. Durham University Business School, Durham.

Abstract

This paper proposes a theory of nominal exchange rate determination to shed light on its role in countries’ portfolio choices and its impact on the dynamics of net foreign assets through valuation effects. The model can rationalize the behavior of the US external position over the past 20 years, which has been characterized by persistent current account deficits and stabilizing valuation effects, as a consequence of the increase in emerging market countries’ share of world GDP. We also show quantitatively that the valuation channel is a key component of the process of external adjustment, consistently with the empirical literature

Item Type:Monograph (Working Paper)
Full text:(VoR) Version of Record
First Live Deposit - 31 May 2019
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Status:Peer-reviewed
Publisher Web site:https://www.dur.ac.uk/business/research/economics/working-papers/
Record Created:31 May 2019 11:28
Last Modified:04 Jun 2019 16:31

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