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Last edited by Open Library Bot
December 5, 2010 | History

Neither a borrower nor a lender 1 edition

Neither a borrower nor a lender
David Dollar

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Neither a borrower nor a lender
does China's zero net foreign asset position make economic sense?
David Dollar, Aart Kraay.

Published 2005 by World Bank in [Washington, D.C .
Written in English.

About the Book

"China in the past few years has emerged as a net foreign creditor on the international scene with net foreign assets slightly greater than zero percent of wealth. This is surprising given that China is a relatively poor country with a capital-labor ratio about one-fifth the world average and one-tenth the U.S. level. The main questions that the authors address are whether it makes economic sense for China to be a net creditor and how they see China's net foreign asset position evolving over the next 20 years. They calibrate a theoretical model of international capital flows featuring diminishing returns, production risk, and sovereign risk. The calibrations for China yield a predicted net foreign asset position of -17 percent of China's wealth. The authors also estimate nonstructural cross-country regressions of determinants of net foreign assets in which China is always a significant outlier with 5 to 7 percentage points more of net foreign assets relative to wealth than is predicted by its characteristics. China's extensive capital controls can explain why its current net foreign asset position is far away from what is predicted by open-economy models and cross-country empirics. It seems reasonable to assume that China's international financial integration will increase over time. The authors calibrate and predict different scenarios out to 2025. These scenarios are necessarily speculative, but it is interesting that they typically imply negative net foreign asset positions between 3 and 9 percent of wealth. What may be counter-intuitive for many policymakers is that successful institutional reform and productivity growth are likely to lead to more negative net foreign asset positions than occurs with stagnation. Starting from China's zero net foreign assets position, it would take current account deficits in the range of 2-5 percent of GDP to reach any of these net foreign assets positions. These are not unreasonable deficits, but they require a large adjustment from the present 6 percent of GDP current account surplus. "--World Bank web site.

Edition Notes

Includes bibliographical references.
Title from PDF file as viewed on 12/16/2005.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.

Series
Policy research working paper ;, 3801, Policy research working papers (Online) ;, 3801.

Classifications

Library of Congress
HG3881.5.W57

The Physical Object

Format
Electronic resource

ID Numbers

Open Library
OL3479633M
LC Control Number
2005705579

History Created December 9, 2009 · 3 revisions Download catalog record: RDF / JSON

December 5, 2010 Edited by Open Library Bot Added subjects from MARC records.
February 4, 2010 Edited by WorkBot add more information to works
December 9, 2009 Created by WorkBot add works page