Creditor countries and debtor countries : some asymmetries in the dynamics of external wealth accumulation

Abstract

Following the global financial crisis, the external imbalances in terms of countries’ current account balances have been reduced to a large extent. However, the imbalances measured in terms of net external wealth (or net international investment position, NIIP) have continued to increase. The empirical analysis presented in this article suggests that there is asymmetry between net debtor countries (negative NIIP) and net creditor countries (positive NIIP), with potential implications for global trade and growth. In the case of debtors, their negative NIIP contributes to reducing current account deficits and is therefore a stabilising factor. Conversely, in the case of the creditors, the NIIP contributes to increasing current account surpluses which, in turn, strengthens the dynamics of wealth accumulation in these countries, compared with the rest of the world