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Global imbalances or bad accounting? The missing dark matter in the wealth of nations

  • Ricardo Hausmann and Federico Sturzenegger

This paper argues that current account statistics may provide a poor indication for the real evolution of a country’s net foreign assets. The differences may arise due to mismeasurement of FDI, as well as from unreported trade of insurance or liquidity services across countries. We suggest estimating net foreign assets by capitalizing the service flow and estimating the current account from the changes in this stock of foreign assets. We call dark matter the difference between our measure of net foreign assets and that portrayed by official statistics. When apply our estimation to a large set of countries. In particular we find that the US has run no current account deficits over the last two decades, and that global imbalances are relatively small and very stable. The exports of dark matter of the US appear to be fairly steady, casting doubts on the need for a major rebalancing of the global economy.

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File URL: http://www.utdt.edu/download.php?fname=_115331284270115200.pdf
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Paper provided by Universidad Torcuato Di Tella in its series Business School Working Papers with number globalimbal.

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Length: 50 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:udt:wpbsdt:globalimbal
Contact details of provider: Postal: Miñones 2177 - (1428) Buenos Aires
Web page: http://www.utdt.edu/listado_contenidos.php?id_item_menu=4994

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  1. Maurice Obstfeld & Kenneth Rogoff & Richard Clarida, . "The Unsustainable US Current Account Position Revisited," Working Paper 14901, Harvard University OpenScholar.
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  12. Obstfeld, Maurice & Rogoff, Kenneth, 2000. "Perspectives on OECD Economic Integration: Implications for US Current Account Adjustment," Center for International and Development Economics Research, Working Paper Series qt16z3s2s2, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
  13. Blanchard, Olivier & Giavazzi, Francesco & Sá, Filipa, 2005. "The US Current Account and the Dollar," CEPR Discussion Papers 4888, C.E.P.R. Discussion Papers.
  14. 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.
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  27. repec:tcd:wpaper:tep16 is not listed on IDEAS
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