In economics, valuation effects of a country are the changes in the value of assets held abroad, minus the changes in the value of domestic assets held by foreign investors.
The traditional balance of payment identity ignores valuation effects, only recognizes that changes in the net foreign assets (NFA) are fully captured by the current account. The new balance of payment identity, however, considers the role of asset price changes and valuation effects. Changes in the NFA equal the current account plus valuation effects.
Read more about Valuation Effects: Valuation Effects and The U.S. Current Account Deficits
Famous quotes containing the word effects:
“Trade and commerce, if they were not made of India-rubber, would never manage to bounce over the obstacles which legislators are continually putting in their way; and, if one were to judge these men wholly by the effects of their actions and not partly by their intentions, they would deserve to be classed and punished with those mischievous persons who put obstructions on the railroads.”
—Henry David Thoreau (1817–1862)