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The Implications of Dark Matter for Assessing the US External Imbalance

Author

Listed:
  • Ricardo Hausmann

    (Harvard's Growth Lab)

  • Federico Sturzenegger

Abstract

This paper clarifies how dark matter changes our assessment of the US external imbalance. Dark matter assets are defined as the capitalized value of the return privilege obtained by US assets. Because this return privilege has been steady over recent decades, it is likely to persist in the future or even to increase, as it becomes leveraged by an increasingly globalized world. Once this is included in future projections of US current accounts, the US external position looks much more balanced than depicted in official statistics.

Suggested Citation

  • Ricardo Hausmann & Federico Sturzenegger, 2006. "The Implications of Dark Matter for Assessing the US External Imbalance," CID Working Papers 137, Center for International Development at Harvard University.
    • Handle: RePEc:cid:wpfacu:137
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    File URL: https://www.hks.harvard.edu/sites/default/files/centers/cid/files/publications/faculty-working-papers/137.pdf
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    References listed on IDEAS

    as
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    4. Kugler, Peter & Weder di Mauro, Beatrice, 2005. "Why Are Returns on Swiss Franc Assets So Low? Rare Events May Solve the Puzzle," CEPR Discussion Papers 5181, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Pavlova, Anna & Rigobon, Roberto, 2010. "An asset-pricing view of external adjustment," Journal of International Economics, Elsevier, vol. 80(1), pages 144-156, January.
    2. Mr. Ravi Balakrishnan & Mr. Volodymyr Tulin & Mr. Tamim Bayoumi, 2007. "Globalization, Gluts, Innovation or Irrationality: What Explains the Easy Financing of the U.S. Current Account Deficit?," IMF Working Papers 2007/160, International Monetary Fund.

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    More about this item

    Keywords

    The Implications of Dark Matter for Assessing the US External Imbalance;

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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