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Federal Reserve Bank of New York
Current Issues in Economics and Finance
The changing nature of the U.S. balance of payments
Rebecca Hellerstein
Cédric Tille
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.


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Rebecca Hellerstein & Cédric Tille, "The changing nature of the U.S. balance of payments" , Federal Reserve Bank of New York, Current Issues in Economics and Finance, volume 14, issue Jun, 2008.
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Keywords: Balance of payments ; International economic relations ; Investments; Foreign
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