The Changing Nature of the U.S. Balance of Payments

7 Pages Posted: 8 Jul 2008

See all articles by Rebecca Hellerstein

Rebecca Hellerstein

Federal Reserve Bank of New York

Cédric Tille

Graduate Institute of International and Development Studies (HEI)

Date Written: July 2008

Abstract

Earnings on cross-border investments figure only marginally in net estimates of the U.S. current account, but they represent an increasingly large share of gross flows between the United States and other nations. Because these earnings fluctuate much more sharply than trade flows, they can be expected to create permanently higher current account volatility. Such increased volatility is not necessarily grounds for concern, however; it reflects an international sharing of risk that provides a buffer against domestic economic uncertainty.

Keywords: balance of payments, U.S. current account, international assets and liabilities, financial integration, globalization, asset income

JEL Classification: F00, F01, F02

Suggested Citation

Hellerstein, Rebecca and Tille, Cedric, The Changing Nature of the U.S. Balance of Payments (July 2008). Current Issues in Economics and Finance, Vol. 14, No. 4, July 2008. Available at SSRN: https://ssrn.com/abstract=1156934

Rebecca Hellerstein (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Cedric Tille

Graduate Institute of International and Development Studies (HEI) ( email )

PO Box 136
Geneva, CH-1211
Switzerland

HOME PAGE: http://sites.google.com/site/cedrictilleheid/home

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