Recent literature has argued that conventional measures of external sustainability – the trade balance and current account – are misleading because they omit capital gains on net foreign asset positions. We adjust the definition of the current account to include the capital gains and discuss...

"International macro-finance is a new area of open economy macroeconomics that brings portfolio choice and asset pricing considerations into models of international macroeconomics. The importance of these considerations-typically relegated to Finance and largely overlooked in traditional...