Efectos de Valoración en la Posición de Inversión Internacional de España

Abstract

The international Investment Position (IPP) is a statement that shows the value of external financial assets and liabilities of residents of an economy at a point in time. Its evolution at the end of a specific period reflects balance of payments financial account transactions, valuation changes (in asset prices and exchange rates) and other adjustments, which consist mainly of reclassifications of external financial assets and liabilities. The purpose of this paper is to provide figures on trends of valuation adjustments due to price and exchange rate changes implicit in Spain´s International Investment Position (IIP), and to briefly analyze their limitations. We found that valuation effects depend on the characteristics of the financial instruments involved, and on the sources of information available for each component. In the case of portfolio investment transactions, we used security by security market prices that were available for the years 2003 and 2004. Additionally, in Spain´s international investment position, most foreign direct investment data are not available at market values. As these assets and liabilities have experienced important price increases between 1993 and 2006, we present a new methodology for measuring foreign direct investment positions that includes valuation effects. The results presented in this paper show that in Spain, revaluations of stocks explain a very important part of changes in the IIP during recent years: 55% of the increase in the net liability position of the Spanish economy between 1993 and 2004 reflects changes of value due to variations in prices or in exchange rates of external assets and liabilities. Overall, the sum of these revaluation effects represent 19% of GDP of the year 2004. Between 1997 and 2004, Spain’s net liability position increased 247,930 million euros, of which balance of payments financial account transactions accounted for 52,6%, whereas revaluations and other adjustments explain the remaining 47,3%. The latter is broken own into 27,6% due to price effects, 10,1% to exchange rate changes, and 9,6% to other adjustments.