Impact of Investment Openness on National External Wealth: Based on Valuation Effects Perspective
Table 1
Empirical variable processing methods and data sources.
Variable
Variable definitions
Processing method
Data source
Dependent variable
nfa
Changes in national external wealth
According to IMF (2005), nfa=va+ca
EWN database4
va
The valuation effects, which represent the stock value changes in national external wealth
The valuation effects are divided by dollar-denominated PPP GDP
EWN database
ca
The current account, which represents the flow value changes in national external wealth
The current account is divided by dollar-denominated PPP GDP
OECD database
Independent variable
FO
The degree of investment openness
As noted in Lane and Milesi-Ferretti [35], degree of investment openness is expressed as (FDI and EQ assets + liabilities)/GDP, taken natural logarithm
EWN database
Control variable
z
Technological innovation shock
Use the Cobb–Douglas production function to approximate total factor productivity (TFP), and the relative technological innovation shock is represented as the TFP difference between domestic and foreign countries
OECD database
TR
The degree of trade openness
As noted in Lv et al. [36], trade openness could be represented as (import of goods and services + export)/GDP, taken natural logarithm
