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

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  • Andrew Atkeson
  • Jonathan Heathcote
  • Fabrizio Perri

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.

Suggested Citation

  • Andrew Atkeson & Jonathan Heathcote & Fabrizio Perri, 2025. "The End of Privilege: A Reexamination of the Net Foreign Asset Position of the United States," American Economic Review, American Economic Association, vol. 115(7), pages 2151-2206, July.
    • Handle: RePEc:aea:aecrev:v:115:y:2025:i:7:p:2151-2206
    DOI: 10.1257/aer.20230732
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    More about this item

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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