Country portfolios and the Solow-model
AbstractThis paper shows that an open economy Solow model provides a good description of international investment positions in industrialized countries. More than half of the variation of net foreign assets in the 1990's can be attributed to cross country differences in the savings rate, population and productivity growth. Furthermore, these factors seem to be an important channel through which output and wealth affect international investment positions. We interpret this funding as evidence that decreasing returns are an important source of international capital movements. The savings rate (and population growth) influence the composition of country portfolios through their downward (upward) pressure on the marginal productivity of capital.
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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 904.
Date of creation: Sep 2005
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Web page: http://www.econ.upf.edu/
International investments; savings rate; productivity growth;
Find related papers by 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
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-12-09 (All new papers)
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