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Returns on foreign assets and liabilities- exorbitant privileges and stabilising adjustments

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  • Zsolt Darvas
  • Pia Hüttl

Abstract

Financial globalisation has led to large increases in foreign assets and liabilities in recent decades, increasing the scope for valuation changes that are potentially greater than trade or financial flows. We confirm that the United States enjoys an ‘exorbitant privilege’ on flow income from foreign assets, which is primarily related to foreign direct investment (FDI). The geographical allocation of FDI assets explains only a small part of the US yield...

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  • Zsolt Darvas & Pia Hüttl, 2017. "Returns on foreign assets and liabilities- exorbitant privileges and stabilising adjustments," Working Papers 22975, Bruegel.
    • Handle: RePEc:bre:wpaper:22975
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    Cited by:

    1. Gustavo Adler & Mr. Daniel Garcia-Macia, 2018. "The Stabilizing Role of Net Foreign Asset Returns," IMF Working Papers 2018/079, International Monetary Fund.
    2. Mariana Colacelli & Deepali Gautam & Cyril Rebillard, 2021. "Japan’s Foreign Assets and Liabilities: Implications for the External Accounts," IMF Working Papers 2021/026, International Monetary Fund.
    3. Siranova, Maria & Tiruneh, Menbere Workie & Fisera, Boris, 2021. "Creating the illicit capital flows network in Europe – Do the net errors and omissions follow an economic pattern?," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 955-973.
    4. Bergant, Katharina, 2021. "The role of stock-flow adjustment during the global financial crisis," Journal of International Money and Finance, Elsevier, vol. 110(C).
    5. Kábrt, Tomáš & Brůna, Karel, 2022. "Asymmetric effects of foreign capital on income inequality: The case of the Post-China 16 countries," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 613-626.
    6. Jörg Mayer, 2021. "The “exorbitant privilege” and “exorbitant duty” of the United States in the international monetary system: implications for developing countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(4), pages 927-964, November.
    7. Joyce, Joseph, 2022. "The Impact of FDI Income on Income Inequality in Home Countries," MPRA Paper 114564, University Library of Munich, Germany.
    8. Siranova, Maria, 2024. "Statistical omissions as the stabilizing factor of net foreign assets in EU countries," International Economics, Elsevier, vol. 178(C).
    9. Joyce, Joseph, 2021. "The International Distribution of FDI Income And Its Impact on Income Inequality," MPRA Paper 106448, University Library of Munich, Germany.

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