June 2012 issue contents
The Geographical Composition of National External Balance Sheets: 1980-2005

by Chris Kubeleca and Filipa Sá b


This paper constructs a data set on the stocks of bilateral external assets and liabilities for eighteen countries in the period from 1980 to 2005. It distinguishes between four asset classes: foreign direct investment, portfolio equity, debt, and foreign exchange reserves. Network methods are used to explore the key facts that emerge from the data. We find that there has been a remarkable increase in interconnectivity over the past two decades and that this has been centered around a small number of countries. In a simulation exercise we show that shocks to one of the central countries generate much larger losses to the network than shocks to the periphery.

JEL Code: F3.

Full article (PDF, 47 pages 696 kb)

a Royal Bank of Scotland 
b Trinity College, University of Cambridge