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Koncept udržitelnosti negativní čisté investiční pozice a jeho aplikace na příkladu České republiky v letech 1999-2011
[A Concept of Sustainability of Negative Net International Investment Position and Its Application to the Case of the Czech Republic in 1999-2011]

Author

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  • Karel Brůna

Abstract

The paper deals with a theoretical and empirical analysis of determinants of both net international investment position/GDP ratio and net costs of negative investment position using the case of the Czech Republic in 1999-2011. It defines country's short-run and long-run sustainability conditions that are based on dynamics of both sources created by an economy through net export surplus and negative net yields paid from international investment position. The paper points out important differences between large advanced and small transitive economies in case of costs of net investment position. The factors like country's position of FDI lender/debtor, world investment/ invoicing currency, exogeneity of foreign asset's and liability's interest yields, role of FX reserves accumulation by country's central bank and position of foreign currency denominated loans on foreign liabilities are discussed. Empirical analysis confi rms the Czech economy is not able to satisfy long run sustainability condition due to high net costs of negative investments position. Estimation of parameters in econometric model shows that worsening net investment position to GDP is a result of high dividend and interest yields paid from foreign liabilities that is still above positive balance of net export.

Suggested Citation

  • Karel Brůna, 2013. "Koncept udržitelnosti negativní čisté investiční pozice a jeho aplikace na příkladu České republiky v letech 1999-2011 [A Concept of Sustainability of Negative Net International Investment Position," Politická ekonomie, Prague University of Economics and Business, vol. 2013(1), pages 67-90.
    • Handle: RePEc:prg:jnlpol:v:2013:y:2013:i:1:id:884:p:67-90
    DOI: 10.18267/j.polek.884
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    References listed on IDEAS

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    1. Mr. Damiano Sandri, 2011. "Precautionary Savings and Global Imbalances in World General Equilibrium," IMF Working Papers 2011/122, International Monetary Fund.
    2. Gian Maria Milesi-Ferretti, & Philip R. Lane, 2003. "International Financial Integration," The Institute for International Integration Studies Discussion Paper Series iiisdp03, IIIS.
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    4. Matthew Higgins & Thomas Klitgaard, 2007. "Financial globalization and the U.S. current account deficit," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 13(Dec).
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    6. Cédric Tille, 2003. "The impact of exchange rate movements on U.S. foreign debt," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 9(Jan).
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    More about this item

    Keywords

    current account; sustainability; net investment position;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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