Valuation effect as a determinant of the international investment position in Central and Eastern European economies

Konrad Sobański

Abstract

The aim of this paper is to evaluate the significance of the valuation effect in determining the dynamics of the net international investment position of CEE economies. For this purpose an analysis of BoP and IIP time series for the four largest CEE economies (Poland, the Czech Republic, Hungary and Romania) for the years 2005-2013 was carried out. The exercise revealed that the valuation effect (VE) is, in the short run, the key determinant of net IIP changes (for most observed years). Nevertheless, in the long-run its influence decreases as valuation gains and losses tend to cancel each other out. As the VE is relatively volatile, it is important to analyse its dynamics over the mid and long-term when evaluating the IIP. The significance of the VE for determining net IIP dynamics turned out to be non-investment-type specific because valuations of both the short-term and long-term investments contributed in a large part to the change in the net IIP. Similarities in the dynamics of the VE in CEE countries prove that the VE depends to a large extent on the general price fluctuations in financial markets that nowadays exhibit strong correlations across countries.
Author Konrad Sobański (WGM / KFM)
Konrad Sobański,,
- Department of International Finance
Journal seriesEquilibrium, ISSN 1689-765X, e-ISSN 2353-3293, (B 14 pkt)
Issue year2015
Vol10
No3
Pages151-164
Publication size in sheets1.1
Keywords in Englishinternational financ,e valuation effect, international investment position, Central and Eastern European economies
DOIDOI:10.12775/EQUIL.2015.030
URL http://economic-research.pl/Journals/index.php/eq/article/view/210
Languageen angielski
Score (nominal)14
ScoreMinisterial score = 14.0, 10-11-2019, ArticleFromJournal
Ministerial score (2013-2016) = 14.0, 10-11-2019, ArticleFromJournal
Publication indicators WoS Citations = 1
Citation count*3 (2020-10-15)
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