Economics, Econometrics and Finance
5 years ago

U.S. Dominates Global Income Flows Despite Massive Foreign Debt Burden.

Liberty Street Economics
Income Flows from U.S. Foreign Assets and Liabilities
Matthew Higgins, Thomas Klitgaard

Paper Summary

Foreign investors put 1trillionintoU.S.assetsin2011,whileU.S.investorsput1 trillion into U.S. assets in 2011, while U.S. investors put 1trillionintoU.S.assetsin2011,whileU.S.investorsput0.5 trillion abroad. This created a gap of -$4.2 trillion between U.S. assets and liabilities. Surprisingly, U.S. income from foreign investments is higher than payments made abroad. This is because foreign investments in the U.S. are in low-return assets, while U.S. investments abroad earn higher returns.

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