Showing papers by "Gian Maria Milesi-Ferretti published in 2004"
TL;DR: In this paper, the authors studied the effect of budget rules on the use of creative accounting and found that the probability of detecting creative accounting depends on the size and the transparency of the budget.
256 citations
TL;DR: In this article, the authors present a simple theoretical framework that leads to testable implications for the long-run comovements of real exchange rates, net foreign assets, relative GDP and terms of trade.
Abstract: The relationship between international payments and the real exchange rate-the transfer problem—is a classic question in international economics. We use cross-country data on real exchange rates and a newly constructed data set on countries' net external positions to shed new light on this question. We present a simple theoretical framework that leads to testable implications for the long-run comovements of real exchange rates, net foreign assets, relative GDP and terms of trade, and cross-country and time series evidence on the subject. We show that on average countries with net external liabilities have more depreciated real exchange rates, and that the main channel of transmission seems to be the relative price of nontraded goods, rather than the relative price of traded goods, across countries.
247 citations
TL;DR: The authors provided a systematic analysis of bilateral, source and host factors driving portfolio equity investment across countries, using newly released data on international equity holdings at the end of 2001, and developed a model that links bilateral equity holdings to bilateral trade in goods and services.
Abstract: We provide a systematic analysis of bilateral, source and host factors driving portfolio equity investment across countries, using newly released data on international equity holdings at the end of 2001. We develop a model that links bilateral equity holdings to bilateral trade in goods and services and find that the data strongly support such a correlation. Larger bilateral positions are also associated with proxies for informational proximity. We further document that the scale of aggregate foreign equity asset and liability holdings is larger for richer countries and countries with more developed stock markets.
193 citations
TL;DR: The authors empirically explores some of the interconnections between financial globalization and exchange rate adjustment and discusses the policy implications, showing that large gross cross-holdings of foreign assets and liabilities mean that the valuation channel has grown in importance, relative to the traditional trade balance channel.
Abstract: The founders of the Bretton Woods System 60 years ago were primarily concerned with orderly exchange rate adjustment in a world economy that was characterized by widespread restrictions on international capital mobility. In contrast, the rapid pace of financial globalization during recent years poses new challenges for the international monetary system. In particular, large gross cross-holdings of foreign assets and liabilities mean that the valuation channel of exchange rate adjustment has grown in importance, relative to the traditional trade balance channel. Accordingly, this paper empirically explores some of the interconnections between financial globalization and exchange rate adjustment and discusses the policy implications.
100 citations
TL;DR: This article examined the degree to which reductions in government debt in EU countries has been accompanied by a decumulation of government assets and found a strong correlation between changes in government liabilities and government assets.
Abstract: Several European Union countries have recently implemented or are envisaging fiscal operations which improve budgetary figures but have no structural impact on government finances. We evaluate some of these measures using a balance sheet approach. In particular, we examine the degree to which reductions in government debt in EU countries has been accompanied by a decumulation of government assets. In the run-up to Maastricht we find a strong correlation between changes in government liabilities and government assets, and larger declines in government assets in countries starting from higher public debt levels.
83 citations
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TL;DR: The authors empirically explores some of the interconnections between financial globalization and exchange rate adjustment and discusses the policy implications, showing that large gross cross-holdings of foreign assets and liabilities means that the valuation channel has grown in importance, relative to the traditional trade balance channel.
Abstract: The founders of the Bretton Woods System sixty years ago were primarily concerned with orderly exchange rate adjustment in a world economy that was characterized by widespread restrictions on international capital mobility. In contrast, the rapid pace of financial globalization during recent years poses new challenges for the international monetary system. In particular, large gross cross-holdings of foreign assets and liabilities means that the valuation channel of exchange rate adjustment has grown in importance, relative to the traditional trade balance channel. Accordingly, this Paper empirically explores some of the inter-connections between financial globalization and exchange rate adjustment and discusses the policy implications.
39 citations
TL;DR: In this article, a systematic analysis of bilateral, source and host factors driving portfolio equity investment across countries, using newly-released data on international equity holdings at the end of 2001, is presented.
Abstract: The paper provides a systematic analysis of bilateral, source and host factors driving portfolio equity investment across countries, using newly-released data on international equity holdings at the end of 2001. It develops a model that links bilateral equity holdings to bilateral trade in goods and services and finds that the data strongly support such a correlation. Larger bilateral positions are also associated with proxies for informational proximity. It further documents that the scale of aggregate foreign equity asset and liability holdings is larger for richer countries and countries with more developed stock markets.
36 citations
TL;DR: In this article, the authors examined the degree to which reductions in government debt in EU countries has been accompanied by a decumulation of government assets, and found a strong correlation between changes in government liabilities and government assets.
Abstract: Several European Union countries have recently implemented or are envisaging fiscal that operations improve budgetary figures but have no structural impact on government finances. This paper evaluates some of these measures using a balance sheet approach. In particular, it examines the degree to which reductions in government debt in EU countries has been accompanied by a decumulation of government assets. In the run-up to Maastricht (1997) it finds a strong correlation between changes in government liabilities and government assets, and larger declines in government assets in countries starting from higher public debt levels.
33 citations
Posted Content•
TL;DR: The authors provided a systematic analysis of bilateral, source and host factors driving portfolio equity investment across countries, using newly released data on international equity holdings at the end of 2001, and developed a model that links bilateral equity holdings to bilateral trade in goods and services.
Abstract: We provide a systematic analysis of bilateral, source and host factors driving portfolio equity investment across countries, using newly released data on international equity holdings at the end of 2001. We develop a model that links bilateral equity holdings to bilateral trade in goods and services and find that the data strongly support such a correlation. Larger bilateral positions are also associated with proxies for informational proximity. We further document that the scale of aggregate foreign equity asset and liability holdings is larger for richer countries and countries with more developed stock markets.
9 citations
Posted Content•
TL;DR: In this paper, the authors examined the degree to which reductions in government debt in EU countries has been accompanied by a decumulation of government assets, and found a strong correlation between changes in government liabilities and government assets.
Abstract: Several European Union countries have recently implemented or are envisaging fiscal that operations improve budgetary figures but have no structural impact on government finances. This paper evaluates some of these measures using a balance sheet approach. In particular, it examines the degree to which reductions in government debt in EU countries has been accompanied by a decumulation of government assets. In the run-up to Maastricht (1997) it finds a strong correlation between changes in government liabilities and government assets, and larger declines in government assets in countries starting from higher public debt levels.
3 citations
TL;DR: The authors empirically explores some of the interconnections between financial globalization and exchange rate adjustment and discusses the policy implications, showing that large gross cross-holdings of foreign assets and liabilities means that the valuation channel has grown in importance, relative to the traditional trade balance channel.
Abstract: The founders of the Bretton Woods System sixty years ago were primarily concerned with orderly exchange rate adjustment in a world economy that was characterized by widespread restrictions on international capital mobility. In contrast, the rapid pace of financial globalization during recent years poses new challenges for the international monetary system. In particular, large gross cross-holdings of foreign assets and liabilities means that the valuation channel of exchange rate adjustment has grown in importance, relative to the traditional trade balance channel. Accordingly, this paper empirically explores some of the inter-connections between financial globalization and exchange rate adjustment and discusses the policy implications.