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been considered one of the main reasons for the turbulences in the world economy since 2007. Economic theory suggests that …. To investigate on the mechanisms that allow the USA to do so, this paper sets up a two-country DGE model with asymmetric … of Seigniorage and valuation effects to be able to run a continuous current account deficit. These mechanisms work in …
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We use a portfolio-based framework to understand what drives the decline of the U.S. net foreign asset (NFA) position and the reversal in returns earned on the US NFA (exorbitant privilege). We show that global savings gluts and monetary policies widened the U.S. NFA position, while investor...
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