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:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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245 0 0 |a External Wealth, the Trade Balance, and the Real Exchange Rate  |c Philip Lane, Gian Milesi-Ferretti 
260 |a Washington, D.C.  |b International Monetary Fund  |c 2002 
300 |a 35 pages 
651 4 |a United States 
653 |a Economic policy 
653 |a Government and the Monetary System 
653 |a Payment Systems 
653 |a Investments, Foreign 
653 |a Balance of trade 
653 |a Terms of trade 
653 |a Regimes 
653 |a Monetary economics 
653 |a Trade balance 
653 |a Long-term Capital Movements 
653 |a Currency 
653 |a Exports and Imports 
653 |a International economics 
653 |a Foreign assets 
653 |a Foreign Exchange 
653 |a Standards 
653 |a Monetary Systems 
653 |a Real exchange rates 
653 |a Foreign exchange market 
653 |a Empirical Studies of Trade 
653 |a Foreign currency exposure 
653 |a Money and Monetary Policy 
653 |a Foreign exchange 
653 |a Nternational cooperation 
653 |a International Investment 
700 1 |a Milesi-Ferretti, Gian 
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989 |b IMF  |a International Monetary Fund 
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520 |a 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