The Measurement of External Accounts / Gustavo Adler, Daniel Garcia-Macia, Signe Krogstrup.

Format:

Book

Government document

Author/Creator:

Adler, Gustavo.

Contributor:

Garcia-Macia, Daniel.

Krogstrup, Signe.

Series:

IMF Working Papers; Working Paper ; No. 2019/132

IMF Working Papers

Language:

English

Subjects (All):

Balance of payments.

Foreign property.

Corporations--Finance.

Corporations.

Physical Description:

1 online resource (31 pages)

Edition:

First edition.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2019.

Summary:

Growing international integration in trade and finance can challenge the measurement of external accounts. This paper presents a unified conceptual framework for identifying sources of mismeasurement of foreign investment income in current account balances. The framework allows to derive a precise definition of measurement distortions and an empirical strategy for estimating their importance. As an application, we empirically estimate two specific distortions related to inflation and retained earnings on portfolio equity for a broad set of countries. We find these may explain a non-trivial share of current account imbalances and that they are particularly relevant in countries with large external investment positions. We also discuss how merchanting and profit-shifting activities could lead to measurement distortions. We suggest areas for future research and underline the need to strengthen data collection efforts.

Contents:

Cover

The Measurement of External Accounts

1 Introduction

2 A Conceptual Framework

2.1 Stock and Flow Identities

2.2 Returns on Debt and Equity

2.2.1 Return on Debt

2.2.2 Return on Equity

2.3 Statistical Versus Economic Measures of the Current Account

2.4 Measurement Distortions

2.4.1 The Ination Distortion

2.4.2 The Retained Earnings Distortion

2.4.3 The Expected Default Rate Distortion

2.5 De nitional Measurement Issues

3 Empirical Application

3.1 Empirical Estimation Strategy

3.1.1 The Retained Earnings Distortion

3.1.2 The Ination Distortion

3.2 Estimated Distortions and Current Account Imbalances

4 Merchanting and Pro t-shifting

5 Conclusions

References.

Notes:

Includes bibliographical references.

Description based on print version record.

ISBN:

9781498322874

1498322875

9781498322898

1498322891

OCLC:

1119642620