What is behind Denmark’s Current Account Surplus?

Summary:

As of late 2016, Denmark had been running a current account surplus since 1990. The investment income surplus had increased due to an accumulation in the net international investment position and because investments abroad had returned more than investments at home, a fact influenced partly by Denmark's safe-haven status. Despite this, there was no evidence yet that mispricing of risk and inflated expected returns from investment abroad had made Denmark’s high account surplus vulnerable to adverse developments in deficit countries. This paper is an examination of the factors driving Denmark’s account surplus of the time.