01921cas a2200265 a 4500 AALejournalIMF006287 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451963298 1018-5941 BD-DhAAL BD-DhAAL Mendoza, Enrique. On the Solvency of Nations : Are Global Imbalances Consistent with Intertemporal Budget Constraints? / Enrique Mendoza, Marco Terrones, Ceyhun Bora Durdu. Washington, D.C. : International Monetary Fund, 2010. 1 online resource (39 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Theory predicts that a nation's stochastic intertemporal budget constraint is satisfied if net exports (NX) and net foreign assets (NFA) satisfy an error-correction specification with a residual integrated of any finite order. We test this hypothesis using data for 21 industrial and 29 emerging economies for the 1970-2004 period to search for existence of negative relationship between NX and NFA. The results show that, despite the large global imbalances of recent years, NX and NFA positions are consistent with external solvency. Pooled Mean Group error-correction estimation yields evidence of a statistically significant, negative response of the NX-GDP ratio to the NFA-GDP ratio that is largely homogeneous across countries. Mode of access: Internet Durdu, Ceyhun Bora. Terrones, Marco. IMF Working Papers; Working Paper ; No. 2010/050 Full text available on IMF http://elibrary.imf.org/view/journals/001/2010/050/001.2010.issue-050-en.xml IMF e-Library