scholarly journals U.S. Housing as a Global Safe Asset: Evidence from China Shocks

2021 ◽  
Vol 2021 (1332) ◽  
pp. 1-55
Author(s):  
William Barcelona ◽  
◽  
Nathan Converse ◽  
Anna Wong ◽  
◽  
...  
Keyword(s):  
House Prices ◽  
International Investment ◽  
Economic Stress ◽  
Web Traffic ◽  
Safe Haven ◽  
Price Growth ◽  
Position Data ◽  
Low Exposure ◽  
International Investment Position ◽  
The U.S

This paper demonstrates that the measured stock of China's holding of U.S. assets could be much higher than indicated by the U.S. net international investment position data due to unrecorded historical Chinese in ows into an increasingly popular global safe haven asset: U.S. residential real estate. We first use aggregate capital ows data to show that the increase in unrecorded capital in ows in the U.S. balance of payment accounts over the past decade is mainly linked to in ows from China into U.S. housing markets. Then, using a unique web traffic dataset that provides a direct measure of Chinese demand for U.S. housing at the zip code level, we estimate via a difference-in-difference matching framework that house prices in major U.S. cities that are highly exposed to demand from China have on average grown 7 percentage points faster than similar neighborhoods with low exposure over the period 2010-2016. These average excess price growth gaps co-move closely with macro-level measures of U.S. capital in ows from China, and tend to widen following periods of economic stress in China, suggesting that Chinese households view U.S. housing as a safe haven asset.

scholarly journals Borrowing Without Debt? Understanding the U.S. International Investment Position

2007 ◽  
Vol 42 (1) ◽  
pp. 17-27 ◽  
Author(s):  
Matthew Higgins ◽  
Thomas Klitgaard ◽  
Cédric Tille
Keyword(s):  
International Investment ◽  
International Investment Position ◽  
The U.S

scholarly journals Why did the United States Evolve from the Largest International Creditor in 1980 to the Largest International Debtor in 1990?

2020 ◽  
Vol 48 (4) ◽  
pp. 405-411
Author(s):  
Robert Aliber
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
The United States ◽  
Household Wealth ◽  
International Investment ◽  
Domestic Saving ◽  
Net Foreign Assets ◽  
International Investment Position ◽  
The U.S ◽  
Foreign Assets

AbstractRemarkable transformation of the U.S. international investment position occurred over the last 40 years. U.S. net foreign assets were larger than combined net foreign assets of all other creditors. By 1990, foreign-owned U.S. securities and real assets were larger than U.S. owned foreign securities and assets. This change occurred without the U.S. Treasury borrowing in foreign currency and few U.S. firms borrowing, reflecting a surge in foreign purchases of U.S. securities. Inferences from the currency composition of portfolio changes of those who acquired U.S. dollar securities suggest that foreign savers took the initiative on cross-border investment inflows. The U.S. could not have developed a larger capital account surplus after 1980 unless a similar increase in the U.S. current account deficit occurred. The primary factor that led to the U.S. current account deficit increase was the surge in U.S. stocks and other asset prices, resulting in a U.S. household wealth surge and consumption boom. The foreign saving inflow displaced domestic saving. In addition, an increase in the price of the U.S. dollar led to expenditure-switching from U.S. goods to increasingly less expensive foreign goods. When investor demand for U.S. dollar securities declined, the U.S. dollar price fell in 1992, 2002, and 2020 and the price of U.S. dollar securities declined. The paper discusses the source of the change in the U.S. international investment position, the flow of foreign saving to the U.S., cyclical variability in the foreign saving flow to the U.S., and the potential impact of an adjustable parity arrangement.

scholarly journals The Exchange Value Of The Dollar And The U.S. Trade Balance: A Partial Equilibrium Empirical Investigation

2011 ◽  
Vol 6 (1) ◽  
Author(s):  
Bahram Adrangi ◽  
Mary Allender ◽  
Kambiz Raffiee
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
International Investment ◽  
Current Account Balance ◽  
Exchange Value ◽  
The Many ◽  
International Investment Position ◽  
The Relationship ◽  
The U.S ◽  
The Current Account

The recent depreciation of the dollar against major currencies of the world, notably the euro, has kindled discussion on the causes of this phenomenon and the possible outcomes should it continue. Many politicians blame the rising U.S. current account deficit and some economists have questioned the sustainability of the current account deficit. This paper examines the relationship between the U.S. current account balance, the net U.S. international investment position, and the exchange value of the dollar. Our results show that there is a relationship between the exchange value of the dollar and the current account balance. However, our results do not show that the current account balance is solely responsible for changes in the exchange value of the dollar. This is not surprising given the many influences currently under investigation as possible explanations for the recent behavior of the dollar.

scholarly journals Perspectives on the U.S. Current Account Deficit and Sustainability

2002 ◽  
Vol 16 (3) ◽  
pp. 131-152 ◽  
Author(s):  
Catherine L Mann
Keyword(s):  
Interest Rates ◽  
Current Account ◽  
Global Economy ◽  
Current Account Deficit ◽  
International Investment ◽  
Capital Inflows ◽  
Foreign Capital Inflows ◽  
International Investment Position ◽  
A Current ◽  
The U.S

This essay considers the underpinnings of the large U.S. current account deficit. It then tackles the question of whether the U.S. current account deficit is sustainable. A current account deficit is “sustainable” at a point in time if neither it, nor the associated foreign capital inflows, nor the negative net international investment position are large enough to induce significant changes in economic variables, such as consumption or investment or interest rates or exchange rates. Even if the current account deficit is sustainable by this definition today, its trajectory could still be creating future risks for the U.S. and global economy.

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