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Asset revaluation and trade balance under liability dollarization : The case of South Korea

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  • Asset revaluation and trade balance under liability dollarization
  • Pan, Huiran
  • Chung-Ang University


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Title Asset revaluation and trade balance under liability dollarization
Similar Titles
Sub Title

The case of South Korea

Material Type Reports
Author(English)

Pan, Huiran

Publisher

[Seoul]:Chung-Ang University

Date 2013-09
Journal Title; Vol./Issue Journal of Economic Development:Vol. 38(No. 3)
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Trade
Economy < Economic Administration
Holding Chung-Ang University

Abstract

For the US, recent research has found that exchange rate and asset price movements play an important role in foreign asset revaluation and international trade. This paper studies the impacts of exchange rate and asset price fluctuations on foreign asset revaluation and trade balance in South Korea. I find that asset revaluation in South Korea differs from that in the US because both Korea’s foreign assets and liabilities are denominated in foreign currencies and are subject to exchange rate changes. Furthermore, as implied in recent work, external imbalance can help forecast exchange rates and portfolio returns, but now most of the forecasting power arises from trade imbalance, rather than asset imbalance.