Valuing the Direct Investment Position in U.S. Economic Accounts
AbstractThis paper discusses the methodologies employed in the U.S. international economic accounts, in valuing direct investment in prices of the current period. Under international standards, all of the components of the international investment position should reflect current period prices, rather than historical cost or book values. Virtually all of the categories in the international investment position accounts except direct investment positions can be directly estimated in prices of the current period with reference to readily observable market prices. For example, the value of positions in portfolio investment securities, gold, loans, currencies, and bank deposits can be directly estimated based on face values or market prices of recent transactions. In contrast, direct investment positions typically involve illiquid ownership interests in companies that may possess many unique attributes - such as customer base, management, and ownership of intangible assets - whose value in the current period are difficult to determine, because there is no widely accepted standard for revaluing company financial statements at historical cost into prices of the current period.
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Bibliographic InfoPaper provided by Bureau of Economic Analysis in its series BEA Papers with number 0025.
Date of creation: Oct 2002
Date of revision:
Find related papers by JEL classification:
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-24 (All new papers)
- NEP-CBA-2006-06-24 (Central Banking)
- NEP-MAC-2006-06-24 (Macroeconomics)
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