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Valuing the Direct Investment Position in U.S. Economic Accounts

Author

Listed:
  • Ralph Kozlow

    (Bureau of Economic Analysis)

Abstract

This 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.

Suggested Citation

  • Ralph Kozlow, 2002. "Valuing the Direct Investment Position in U.S. Economic Accounts," BEA Papers 0025, Bureau of Economic Analysis.
  • Handle: RePEc:bea:papers:0025
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    File URL: https://www.bea.gov/papers/pdf/Kozlow-Val.pdf
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    References listed on IDEAS

    as
    1. J. Steven Landefeld & Bruce T. Grimm, 2001. "Revisions to GDP," BEA Papers 0013, Bureau of Economic Analysis.
    2. Kishori Lal, 2003. "Measurement of Output, Value Added, GDP in Canada and the United States: Similarities and Differences," OECD Statistics Working Papers 2003/4, OECD Publishing.
    3. John F. Wilson & James L. Freund & Frederick O. Yohn, Jr & Walther Lederer, 1989. "Measuring Household Saving: Recent Experience from the Flow-of-Funds Perspective," NBER Chapters,in: The Measurement of Saving, Investment, and Wealth, pages 101-152 National Bureau of Economic Research, Inc.
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    Cited by:

    1. Jochem Axel, 2010. "International Financial Competitiveness and Incentives to Foreign Direct Investment," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(1), pages 42-58, February.
    2. Ricardo Hausmann & Federico Sturzenegger, 2006. "Global Imbalances or Bad Accounting? The Missing Dark Matter in the Wealth of Nations," CID Working Papers 124, Center for International Development at Harvard University.
    3. Maiko Wada & Kouichirou Oonishi, 2003. "Differences in Treatment of Direct Investment in the Balance of Payments Statistics and the International Investment Position," Bank of Japan Working Paper Series 03-E-6, Bank of Japan.

    More about this item

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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