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Global Imbalances with Safe Assets in Eurozone

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  • Ly-Dai, Hung

Abstract

In one open two-country economy, a higher domestic productivity level raises both mean and variance of wealth dynamic, and can lead to a greater accumu- lation of safe assets. The empirical evidences on the 19 countries of Eurozone confirm that the safe assets exchange supports the international risk-sharing across countries. Moreover, in comparison with the risky investments (FDI and Portfolio Equities), the safe assets (Bonds) are the dominant driver of global imbalances within Eurozone.

Suggested Citation

  • Ly-Dai, Hung, 2014. "Global Imbalances with Safe Assets in Eurozone," MPRA Paper 90238, University Library of Munich, Germany, revised May 2018.
    • Handle: RePEc:pra:mprapa:90238
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    More about this item

    Keywords

    Current Account; Endogenous Portfolio Choice; Safe Assets; Productivity Level;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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