Current Account Deficits During Heightened Risk: Menacing or Mitigating?

• 成果类型: Article
• 署名作者: Forbes, Kristin; Hjortsoe, Ida; Nenova, Tsvetelina
• 署名单位: Massachusetts Institute of Technology (MIT); Bank of England; National Bureau of Economic Research; Centre for Economic Policy Research - UK
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/ecoj.12482
• 发表日期: 2017
• 页码: 571-623
• 关键词: vector autoregressions; financial crises; external wealth; foreign-assets; liabilities; adjustment; NATIONS; industrial; countries; leverage

摘要

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.