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in a countercyclical way, that is they tend to be positive (negative) when the domestic economy is growing more slowly … (rapidly) than the rest of the world. Countries with more countercyclical net capital gains experience improved consumption …
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This paper shows that, controlling for standard determinants of net external positions, financially-remote countries exhibit more positive net external positions. This finding is found to be stronger for less advanced countries, hinting at external funding problems for more remote countries....
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