The Income Implications of Rising U.S. International Liabilities

8 Pages Posted: 24 Feb 2006

See all articles by Matthew Higgins

Matthew Higgins

Federal Reserve Bank of New York

Thomas Klitgaard

Federal Reserve Bank of New York

Cédric Tille

Graduate Institute of International and Development Studies (HEI)

Abstract

Although the United States has seen its net liabilities surge in recent years, its investment income balance has remained positive - largely because U.S. firms operating abroad earn a higher rate of return than do foreign firms operating here. The continuing buildup in liabilities, however, should soon push the U.S. income balance below zero. In that event, net income flows will begin to boost the nation's current account deficit instead of reducing it.

Keywords: income, liabilities, current, account, international

JEL Classification: F32, F34

Suggested Citation

Higgins, Matthew and Klitgaard, Thomas and Tille, Cedric, The Income Implications of Rising U.S. International Liabilities. Current Issues in Economics and Finance, Vol. 11, No. 12, December 2005. Available at SSRN: https://ssrn.com/abstract=886516

Matthew Higgins

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Thomas Klitgaard (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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