Where did all the borrowing go? A forensic analysis of the U.S. external position

Lane, Philip R.; Milesi‐Ferretti, Gian Maria

doi:10.1016/j.jjie.2008.11.002

Cited by 53 publications

(36 citation statements)

References 24 publications

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“…The U.S., in particular, keeps discovering new portfolio assets from year to year (Curcuru, Dvorak, and Warnock, 2008;Lane and Milesi-Ferretti, 2009). These discoveries partly reflect an improvement in the coverage of U.S. corporations' offshore assets.…”

Section: Vib Implications For Current Account Dynamicsmentioning

confidence: 99%

The Missing Wealth of Nations: Are Europe and the U.S. net Debtors or net Creditors?*

Zucman

2013

The Quarterly Journal of Economics

392

261

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This paper shows that official statistics substantially underestimate the net foreign asset positions of rich countries because they fail to capture most of the assets held by households in offshore tax havens. Drawing on a unique Swiss dataset and exploiting systematic anomalies in countries' portfolio investment positions, I find that around 8% of the global financial wealth of households is held in tax havens, three-quarters of which goes unrecorded. On the basis of plausible assumptions, accounting for unrecorded assets turns the eurozone, officially the world's second largest net debtor, into a net creditor. It also reduces the U.S. net debt significantly. The results shed new light on global imbalances and challenge the widespread view that, after a decade of poor-to-rich capital flows, external assets are now in poor countries and debts in rich countries. I provide concrete proposals to improve international statistics.

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Section: Vib Implications For Current Account Dynamicsmentioning

confidence: 99%

The Missing Wealth of Nations: Are Europe and the U.S. net Debtors or net Creditors?*

Zucman

2013

The Quarterly Journal of Economics

392

261

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“…As suggested by Milesi-Ferretti (2009) andCurcuru, Dvorak, andWarnock (2008), the current account deficits of the U.S. may be overestimated by as much as 0.6% per year when different measurement of net financial inflows is used.…”

Section: Related Studies On Net Foreign Assets and Possible Macroeconmentioning

confidence: 99%

Net foreign assets and macroeconomic volatility

Chia

Jinjarak

Rana

et al. 2014

Journal of Asian Economics

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“…Although the precise magnitude, composition, and working of the financial channel of adjustment are the subject of an ongoing debate (e.g., Gourinchas and Rey, 2007a;Curcuru, Dvorak, and Warnock, 2008;Lane and Milesi-Ferretti, 2009), there is consensus that this channel is quantitatively important in the case of the United States. For instance, Gourinchas and Rey (2007b) estimate that the financial channel contributed on average about 30 percent of the (cyclical) external adjustment of the United States since the 1950s.…”

Section: Introductionmentioning

confidence: 99%

“…See, for instance, Benigno (2009) and Tille (2008). Lane and Milesi-Ferretti (2009) document the importance of equity price movements for the dynamics of U.S. net foreign assets. See also Coeurdacier, Kollmann, and Martin (2009).…”

Section: Introductionmentioning

confidence: 99%

The valuation channel of external adjustment

Ghironi

Lee

Rebucci³

2015

Journal of International Money and Finance

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This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.International financial integration has greatly increased the scope for changes in a country's net foreign asset position through the valuation channel, namely capital gains and losses on external assets and liabilities. We examine this valuation channel in a dynamic equilibrium portfolio model with international trade in equity. By separating asset prices and quantities, we can characterize the first-order dynamics of valuation effects and the current account in macroeconomic dynamics. Specifically, we disentangle the roles of excess returns, capital gains, and portfolio adjustment for consumption risk sharing when financial markets are incomplete. JEL Classification Numbers: F32; F41; G11; G15

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Where did all the borrowing go? A forensic analysis of the U.S. external position

Cited by 53 publications

References 24 publications

The Missing Wealth of Nations: Are Europe and the U.S. net Debtors or net Creditors?*

The Missing Wealth of Nations: Are Europe and the U.S. net Debtors or net Creditors?*

Net foreign assets and macroeconomic volatility

The valuation channel of external adjustment

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