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Return on Cross-Border Investment: Why Does U.S. Investment Abroad Do Better? Technical Paper 2004-17

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  • Juann H. Hung
  • Angelo Mascaro

Abstract

Despite the large size of U.S. net financial obligations to foreigners, U. S. residents have continued to earn more income on their assets abroad than foreigners have on their assets in the United States. In other words, the rate of return on U.S.-owned assets abroad is still higher than the rate of return on foreign-owned assets in the United States. The advantageous return gap for U.S. investment has reflected the much greater return on U.S. direct investments abroad than that on foreign direct investments in the United States. We investigate the

Suggested Citation

  • Juann H. Hung & Angelo Mascaro, 2004. "Return on Cross-Border Investment: Why Does U.S. Investment Abroad Do Better? Technical Paper 2004-17," Working Papers 16204, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:16204
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    Cited by:

    1. Mr. Martin D Evans, 2012. "International Capital Flows and Debt Dynamics," IMF Working Papers 2012/175, International Monetary Fund.
    2. Weshah Razzak & Elmostafa Bentour, 2012. "Do Developing Countries Benefit from Foreign Direct Investments?," EERI Research Paper Series EERI_RP_2012_07, Economics and Econometrics Research Institute (EERI), Brussels.
    3. Stephanie E. Curcuru & Charles P. Thomas, 2014. "The Return on U.S. Direct Investment at Home and Abroad," NBER Chapters, in: Measuring Wealth and Financial Intermediation and Their Links to the Real Economy, pages 205-230, National Bureau of Economic Research, Inc.
    4. Mona Ali, 2016. "Global imbalances and asymmetric returns to US foreign assets: fitting the missing pieces of the US balance of payments puzzle," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(2), pages 167-187, March.
    5. Stephanie E. Curcuru & Tomas Dvorak & Francis E. Warnock, 2007. "The stability of large external imbalances: the role of returns differentials," International Finance Discussion Papers 894, Board of Governors of the Federal Reserve System (U.S.).
    6. Alexandra Heath, 2007. "What explains the US net income balance?," BIS Working Papers 223, Bank for International Settlements.
    7. Agustín Bénétrix, 2009. "The anatomy of large valuation episodes," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(3), pages 489-511, October.
    8. Bridgman, Benjamin, 2014. "Do intangible assets explain high U.S. foreign direct investment returns?," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 159-171.
    9. Curcuru, Stephanie E. & Thomas, Charles P. & Warnock, Francis E., 2013. "On returns differentials," Journal of International Money and Finance, Elsevier, vol. 36(C), pages 1-25.
    10. Eichengreen, Barry, 2006. "Global imbalances: The new economy, the dark matter, the savvy investor, and the standard analysis," Journal of Policy Modeling, Elsevier, vol. 28(6), pages 645-652, September.
    11. Martin Evans, 2012. "International Capital Flows and Debt Dynamics," Working Papers gueconwpa~12-12-04, Georgetown University, Department of Economics.
    12. Juann H. Hung & Young Jin Kim, 2006. "Implications of Past Currency Crises for the U.S. Current Account Adjustment: Working Paper 2006-07," Working Papers 17861, Congressional Budget Office.
    13. John Kitchen, 2007. "Sharecroppers or Shrewd Capitalists? Projections of the US Current Account, International Income Flows, and Net International Debt," Review of International Economics, Wiley Blackwell, vol. 15(5), pages 1036-1061, November.
    14. Juann H. Hung & Edward N. Gamber, 2010. "An Absorption Approach to Modeling the US Current Account," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 334-350, May.
    15. Erasmus K. Kersting & Mark A. Wynne, 2008. "The globalization of U.S. business investment," Staff Papers, Federal Reserve Bank of Dallas, issue Feb.
    16. Habib, Maurizio Michael, 2010. "Excess returns on net foreign assets: the exorbitant privilege from a global perspective," Working Paper Series 1158, European Central Bank.

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