Global Imbalances Reflected in the Eurozone's Accounting

• Název práce v češtině: Globální nerovnováhy v evropském účetnictví
• Název v anglickém jazyce: Global Imbalances Reflected in the Eurozone's Accounting
• Klíčová slova: glob�ální�� nerovnováha, mezin�árodní�� investice, temn�á hmota, p�řizp�ůsobení�� b�ěžn�ého �účtu
• Klíčová slova anglicky: global imbalances, international investment, dark matter, current account adjustment, rebalancing
• Akademický rok vypsání: 2010/2011
• Typ práce: bakalářská práce
• Jazyk práce: angličtina
• Ústav: Institut ekonomických studií (23-IES)
• Vedoucí / školitel: prof. Petr Janský, Ph.D.
• Řešitel: skrytý - zadáno vedoucím/školitelem
• Datum přihlášení: 27.05.2013
• Datum zadání: 27.05.2013
• Datum a čas obhajoby: 18.06.2015 08:00
• Místo konání obhajoby: IES
• Datum odevzdání elektronické podoby: 11.05.2015
• Datum proběhlé obhajoby: 18.06.2015
• Oponenti: Mgr. Michal Paulus, Ph.D.

Zásady pro vypracování

The aim of the thesis is to analyze the obvious discrepancies between stable international investment position and for many years prevailing current account deficits.
A consensus about this discrepancy has not yet been reached. One way to explain it is to admit existence of assets which are not included in international position of certain countries. That would mean the acknowledged assets are undervalued; in other words, there is extra revenue stemming from these assets. According to Hausmann, Sturzenegger (2007), this can be due to liquidity services (since dollar and euro is widely spread, the ECB and FED can earn seigniorage from foreign holders of euro or dollar), insurance (foreign investors pay a premium for stability provided by western governments) and knowledge (enterprises run by western investors are generally more profitable than those in the West run by foreigners due to know-how and corporate governance which the West tend to export).
The second one would be to take the assets hidden in tax havens into account. According to Zucman (2013) there is a general imbalance between world liabilities and assets. This should be because many assets are hidden in tax havens, and thus are reported only as liabilities. Since it is estimated that the most of the assets in tax havens come from developed countries, these would significantly improve their net international investment position. One can consider it as the fourth kind of dark matter.
I would like to summarize existing literature on the topic, put it into perspective of financial crisis, and estimate both dark matter and assets in tax havens of EU member states. Lately, it has been mostly US deficit of current account that was considered; however, I believe that a thorough analysis of current account and international investment position of states such as Germany, France or even Czech Republic can shed some light on true wealth and future macroeconomic projections of the EU.

Tested hypotheses:
1. The North of the EU exports dark matter to the South.
2. Considering dark matter, Germany’s current account surplus is even greater than it is currently measured.
3. Not only the North exports dark matter to the South but there are also transfers of dark matter from the West eastwards.
4. The levels of dark matter remains stable even in context of crisis.
5. There is a positive correlation between the levels of dark matter and foreign exchange rate.
6. There has been a positive effect of adoption of the Euro on the export of dark matter
7. There is a positive correlation between current account deficits and valuation/devaluation of the respective currency.

Seznam odborné literatury

Obstfeld, Maurice and Rogoff, Kenneth, The Unsustainable Us Current Account Position Revisited (November 2004). NBER Working Paper No. w10869.
Feldstein, Martin S., The Role of Currency Realignments in Eliminating the Us and China Current Account Imbalances (January 2011). NBER Working Paper No. w16674.
Zucman, G. "The Missing Wealth of Nations: Are Europe and the U.S. Net Debtors or Net Creditors?" The Quarterly Journal of Economics 128.3 (2013): 1321-364.
Buiter, Willem. Dark Matter or Cold Fusion? GS Global Economic Website, at http://portal.gs.com, New York, NY: n.p., 2006
Brust, Peter, and Vivekanand Jayakumar. "Introducing Valuation Effects-Based External Balance Analysis into the Undergraduate Macroeconomics Curricula: A Simple Framework with Applications." The Journal of Economic Education 43.4 (2012): 363-76
Higgins, Matthew, Thomas Klitgaard, and Cédric Tille. The Income Implications of Rising U.S. International Liabilities. New York: Federal Reserve Bank of New York, 2005
Borrowing Without Debt? Understanding the U.S. International Investment Position, Higgins, Thomas Klitgaard and Cédric Tille, Business Economics, Vol. 42, No. 1 (January 2007), pp. 17-27
The Missing Dark Matter in the Wealth of Nations and its Implications for Global Imbalances, Ricardo Hausmann and Federico Sturzenegger, Economic Policy, Vol. 22, No. 51 (Jul., 2007), pp. 469+471-518
The Valuation of Hidden Assets in Foreign Transactions: Why "Dark Matter" Matters, Ricardo Hausmann and Federico Sturzenegger, Business Economics, Vol. 42, No. 1 (January 2007), pp. 28-34
Global Current Account Imbalances and Exchange Rate Adjustments, Richard N. Cooper and T. N. Srinivasan, Brookings Papers on Economic Activity, Vol. 2005, No. 1 (2005), pp. 124-146
Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate, Martin Feldstein, The Journal of Economic Perspectives, Vol. 22, No. 3 (Summer, 2008), pp. 113-126

Předběžná náplň práce

1. Introduction
2. Literature review
3. Summarization of methods used in the analysis
4. Description of the collected data
5. Testing the hypotheses
6. Analysis of impact of the financial crisis on the macroeconomic discrepancies considered
7. Conclusion

Předběžná náplň práce v anglickém jazyce

The aim of the thesis is to analyze the obvious discrepancies between stable international investment position and for many years prevailing current account deficits.
A consensus about this discrepancy has not yet been reached. One way to explain it is to admit existence of assets which are not included in international position of certain countries. That would mean the acknowledged assets are undervalued; in other words, there is extra revenue stemming from these assets. According to Hausmann, Sturzenegger (2007), this can be due to liquidity services (since dollar and euro is widely spread, the ECB and FED can earn seigniorage from foreign holders of euro or dollar), insurance (foreign investors pay a premium for stability provided by western governments) and knowledge (enterprises run by western investors are generally more profitable than those in the West run by foreigners due to know-how and corporate governance which the West tend to export).
The second one would be to take the assets hidden in tax havens into account. According to Zucman (2013) there is a general imbalance between world liabilities and assets. This should be because many assets are hidden in tax havens, and thus are reported only as liabilities. Since it is estimated that the most of the assets in tax havens come from developed countries, these would significantly improve their net international investment position. One can consider it as the fourth kind of dark matter.
I would like to summarize existing literature on the topic, put it into perspective of financial crisis, and estimate both dark matter and assets in tax havens of EU member states. Lately, it has been mostly US deficit of current account that was considered; however, I believe that a thorough analysis of current account and international investment position of states such as Germany, France, and the Eurozone in genaral can shed some light on true wealth and future macroeconomic projections of the EU.