The anatomy of large valuation episodes
We examine cases in which there is a large shift in a country’s net foreign asset position due to the re-valuation of its foreign assets and/or foreign liabilities. We highlight the differences in large valuation shocks between countries characterized by large gross stocks of foreign assets and foreign liabilities and countries exhibiting large net external positions. Finally, we analyze macroeconomic dynamics in the neighborhood of large valuation episodes.
KeywordsInternational financial integration Valuation channel Valuation episodes
JEL ClassificationF32 F36
The author would like to thank an anonymous referee for helpful comments and suggestions, Philip R. Lane for his continuous encouragement and help with the External Wealth of Nations database. The author gratefully acknowledges the Institute for International Integration Studies (IIIS) at Trinity College Dublin for financial support.
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