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

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

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

  • Andrew Atkeson
  • Jonathan Heathcote
  • Fabrizio Perri
American Economic Review (Forthcoming)

Abstract

The U.S. net foreign asset position declined sharply between 2007 and 2022, and was negative 65 percent of U.S. GDP by the third quarter of 2023. This deterioration primarily reflects a U.S. specific rise in corporate asset values that inflated the value of U.S. equity liabilities to the rest of the world. To interpret these trends we develop an international macro finance model of flows, stocks, asset valuations, the current account, and the net foreign asset position. We find that the welfare impact of rising asset values for a representative U.S. household has been quite negative given extensive foreign ownership of U.S. corporate equity.

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