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American Economic Review Vol. 115 No. 7 2025

The End of Privilege: A Reexamination of the Net Foreign Asset Position of the United States

Andrew Atkeson1; Jonathan Heathcote2; Fabrizio Perri2

1 Department of Economics, UCLA (email: ) · 2 Research Department, Federal Reserve Bank of Minneapolis (email: )

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 macrofinance 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.

DOI
10.1257/aer.20230732
Volume
115
Issue
7
Pages
2151-2206
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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