TITLE

GLOBAL IMBALANCES: A SOURCE OF STRENGTH OR WEAKNESS?

AUTHOR(S)
Forbes, Kristin J.
PUB. DATE
March 2007
SOURCE
CATO Journal;Spring/Summer2007, Vol. 27 Issue 2, p193
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The article explains the lower relative rates of return that foreigners have earned on their U.S. investments, which might reflect optimal decisions in efficient capital markets. Estimates show that from 2001 through 2005, foreigners earned an average of annual return of 2.2% on their U.S. investments, contrast this with the 6.2% earned by American investors abroad. The disparity can be explained by the fact that a large portion of U.S. capital inflows reflect official sector purchases of U.S. assets. Another reason is that this differential represent different composition of foreign investment in the U.S. as against U.S. investment abroad.
ACCESSION #
26266309

 

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