External Adjustment after the Pandemic: Valuation Effects of Net Foreign Asset Positions

Abstract

The global financial markets have the most vulnerable economic backgrounds ever. Thus, small shocks in the financial markets can trigger an enormous crisis in 2008, or even to a larger extent. External adjustments on foreign assets and liabilities will play an important role in international risk sharing and consumption smoothing for individual countries. As Korea cumulates safe assets abroad, Korea would be seen in a better position.