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Home | Events Archive | The End of Privilege: A Reexamination of the Net Foreign Asset Position of the United States
Seminar

The End of Privilege: A Reexamination of the Net Foreign Asset Position of the United States


  • Series
  • Speaker(s)
    Jonathan Heathcote (Federal Reserve Bank of Minneapolis, United States)
  • Field
    Macroeconomics
  • Location
    Erasmus University Rotterdam, Campus Woudestein, G2-21
    Rotterdam
  • Date and time

    November 07, 2022
    14:30 - 15:30

Abstract
The US net foreign asset position has deteriorated sharply since 2007 and is currently negative 65 percent of US GDP. This deterioration primarily reflects changes in the relative values of large gross international equity positions, as opposed to net new borrowing. In particular, a sharp increase in equity prices that has been US-specific has inflated the value of US foreign liabilities. We develop an international macro finance model to interpret these trends, and we argue that the rise in equity prices in the

United States likely reflects rising profitability of domestic firms rather than a substantial accumulation of unmeasured capital by those firms. Under that interpretation, the

revaluation effects that have driven down the US net foreign asset position are associated with large, unanticipated transfers of US output to foreign investors.

Registration
To participate, please register here.