0000000000214229
AUTHOR
Pinar Yesin
Current Account Adjustment and Retained Earnings
This paper develops a formal strategy to calculate current accounts with retained earnings (RE) on equity investment and analyzes their adjustment during the global financial crisis. RE are the part of companies' profits which are reinvested and not distributed to shareholders as dividends. International statistical standards treat RE on foreign direct investment and RE on portfolio investment differently: while the former enter the current and financial account, the latter do not. We show that this differential treatment strongly affects current accounts of several advanced economies, frequently referred to as financial centers, with large positions in equity (portfolio) investment. Our em…
Current account adjustment and retained earnings
First published online: 04 March 2019 This paper develops a formal strategy to calculate current accounts with retained earnings ( RE) on equity investment and analyzes their adjustment during the global financial crisis. RE are the part of companies' profits which is reinvested and not distributed to shareholders as dividends. International statistical standards treat RE on foreign direct investment and RE on portfolio investment differently: while the former enter the current and financial account, the latter do not. We show that this differential treatment strongly affects current accounts of several advanced economies, frequently referred to as financial centers, with large positions in…