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 · 2025 · Volume 115 · Issue 7
Abstract
The US net foreign asset position declined sharply after 2007, reaching negative 60 percent of GDP by the third quarter of 2023. This deterioration primarily reflects a US-specific rise in corporate asset values that inflated the value of US 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 US household has been quite negative given extensive foreign ownership of US corporate equity.
Keywords
Current Account Adjustment, Short-term Capital Movements, International Investment, Long-term Capital Movements, Macroeconomic Aspects of International Trade and Finance: General, International Financial Markets
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