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European Financial Linkages

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  • International Monetary Fund
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    Abstract

    We document external investment positions among European Union countries at the start of the financial crisis through the creation of a new database comprising bilateral external financial asset and liabilities, excluding reserve assets and derivatives. While there are some gaps in the data, the overall coverage of reported bilateral net international investment positions (IIPs) appears satisfactory. The dataset provides a richer picture of financial linkages, enabling us to map the financing of Euro area imbalances. Creditor and debtor positions vis-Ã -vis the rest of the EU have tended to increase between 2000 and 2008, with capital flowing largely from wealthier to catching-up economies. This has in particular resulted in an increased interdependency among Euro Area economies.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 10/295.

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    Length: 60
    Date of creation: 01 Dec 2010
    Date of revision:
    Handle: RePEc:imf:imfwpa:10/295

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    Postal: International Monetary Fund, Washington, DC USA
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    Web page: http://www.imf.org/external/pubind.htm
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    Related research

    Keywords: Data collection; Databases; foreign assets; net foreign assets; foreign asset; foreign asset positions; direct investment; fdi; net foreign asset; net foreign asset positions; financial integration; bilateral trade; portfolio investment; international investment; foreign direct investment; foreign exchange; capital flows; international lending; exchange rates; global financing; international settlements; global financial system; foreign banks; direct investment statistics; global financial stability; trade relations; european integration; international finance; economic integration; trade partners; global financial intermediary; direct investment survey; foreign exchange reserves; globalization; industrial countries; bilateral investment; foreign affiliates;

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    References

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    1. Schmitz, Birgit & von Hagen, Jürgen, 2009. "Current Account Imbalances and Financial Integration in the Euro Area," CEPR Discussion Papers 7262, C.E.P.R. Discussion Papers.
    2. Lane, Philip R. & Shambaugh, Jay C., 2008. "Financial exchange rates and international currency exposures," Discussion Paper Series 1: Economic Studies 2008,22, Deutsche Bundesbank, Research Centre.
    3. Philip R. Lane & Gian Maria Milesi-Ferretti, 2008. "International Investment Patterns," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 538-549, August.
    4. Gian-Maria Milesi-Ferretti & Natalia T. Tamirisa & Francesco Strobbe, 2010. "Bilateral Financial Linkages and Global Imbalances," IMF Working Papers 10/257, International Monetary Fund.
    5. Salvador Barrios & Per Iversen & Magdalena Lewandowska & Ralph Setzer, 2009. "Determinants of intra-euro area government bond spreads during the financial crisis," European Economy - Economic Papers 388, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
    6. Lane, Philip R., 2005. "Global bond portfolios and EMU," Working Paper Series 0553, European Central Bank.
    7. Alan Ahearne & Jean Pisani-Ferry, 2006. "The Euro: only for the agile," Policy Briefs 42, Bruegel.
    8. Nicolas Coeurdacier & Philippe Martin, 2009. "The geography of asset trade and the euro: insiders and outsiders," Sciences Po publications info:hdl:2441/c8dmi8nm4pd, Sciences Po.
    9. Philip Lane & Gian Maria Milesi-Ferretti, 2001. "THE EXTERNAL WEALTH OF NATIONS: Measures of Foreign Assets and Liabilities For Industrial and Developing Countries," Trinity Economics Papers 20014, Trinity College Dublin, Department of Economics.
    10. Tesar, Linda L. & Werner, Ingrid M., 1995. "Home bias and high turnover," Journal of International Money and Finance, Elsevier, vol. 14(4), pages 467-492, August.
    11. Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
    12. Philip R. Lane & Gian Maria Milesi-Ferretti, 2007. "Europe and Global Imbalances," The Institute for International Integration Studies Discussion Paper Series iiisdp226, IIIS.
    13. Fidora, Michael & Fratzscher, Marcel & Thimann, Christian, 2006. "Home bias in global bond and equity markets: the role of real exchange rate volatility," Working Paper Series 0685, European Central Bank.
    14. Martin Feldstein & Charles Horioka, 1979. "Domestic Savings and International Capital Flows," NBER Working Papers 0310, National Bureau of Economic Research, Inc.
    15. Philip Lane & Gian Maria Milesi-Ferretti, 2005. "The International Equity Holdings of Euro Area Investors," The Institute for International Integration Studies Discussion Paper Series iiisdp104, IIIS.
    16. Daniel Leigh & Abdul Abiad & Ashoka Mody, 2007. "International Finance and Income Convergence," IMF Working Papers 07/64, International Monetary Fund.
    17. Milesi-Ferretti, Gian Maria & Strobbe, Francesco & Tamirisa, Natalia, 2010. "Bilateral Financial Linkages and Global Imbalances: A View on The Eve of the Financial Crisis," CEPR Discussion Papers 8173, C.E.P.R. Discussion Papers.
    18. Olivier Blanchard & Francesco Giavazzi, 2002. "Current Account Deficits in the Euro Area: The End of the Feldstein Horioka Puzzle?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(2), pages 147-210.
    19. Jörg Decressin & Emil Stavrev, 2009. "Current Accounts in a Currency Union," IMF Working Papers 09/127, International Monetary Fund.
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    Cited by:
    1. Hideaki Hirata & M. Ayhan Kose & Chris Otrok, . "Regionalization vs. Globalization," Working Paper 164456, Harvard University OpenScholar.
    2. Alexander Herzog-Stein & Fabian Lindner & Rudolf Zwiener, 2013. "Nur das Angebot zählt?," IMK Report 87-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    3. Emilio Espino & Julian Kozlowski & Juan M. Sánchez, 2013. "Regionalization vs. globalization," Working Papers 2013-002, Federal Reserve Bank of St. Louis.
    4. Fabian Lindner, 2013. "Banken treiben Eurokrise," IMK Report 82-2013, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    5. Coates, Dermot & Everett, Mary, 2013. "Profiling the Cross-Border Funding of the Irish Banking System," Economic Letters 04/EL/13, Central Bank of Ireland.

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