Current Account Deficits During Heightened Risk
Menacing or Mitigating
Bibliographic Data
| ID | 9703048 |
|---|---|
| Authors | Kristin J Forbes (Bank of England, corresponding author), Kristin Forbes (Bank of England), Ida Hjortsoe (Bank of England and CEPR), Tsvetelina Nenova (Bank of England) |
| Year | 2017 |
| Volume | 127 |
| Issue | 601 |
| Pages | 571-623 |
| Publication date | 2017-05-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1111/ecoj.12482 |
| OpenAlex | W3121367012 |
| Language | EN |
| Citations received | 3 |
| References cited | 37 |
Large current account deficits, and the corresponding reliance on capital flows from abroad, can increase a country’s vulnerability to periods of heightened risk. We develop a framework to evaluate such vulnerabilities and clarify which characteristics of a country’s international investment portfolio determine whether a current account deficit is ‘menacing’ or ‘mitigating’. Financial factors, namely international investment income and valuation changes on international investments, are critical. Our framework explores how domestic and global risk shocks affect these factors. An application to 10 OECD economies shows that a substantial degree of international risk sharing can occur through current accounts and international portfolios
Business · Capital flows · Current account · Economics · Exchange rate · Financial economics · Foreign direct investment · International economics · International investment · Investment (military · Macroeconomics · Market economy · Monetary economics · Political science · Portfolio · Portfolio investment · Valuation (finance · Vulnerability (computing · Banking stability, regulation, efficiency · Finance · Global Financial Crisis and Policies · Monetary Policy and Economic Impact
| Citations per year | 0.38 |
|---|---|
| Citation span | 2018 - 2023 (6) |
| Highly cited | No |