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The US economy is often referred to as the “banker to the world,” due to its unique role in supplying global reserve assets and funding foreign risky investment. This paper develops a general equilibrium model to analyze and quantify the contribution of this role to rising wealth concentration among American households. I highlight the following points: 1) financial globalization raises wealth inequality in a financially-developed economy initially due to foreign capital pressing up domestic asset prices; 2) much of this increase is transitory and can be reversed as future expected returns on domestic assets fall; and 3) despite the low-interest-rate environment, newly accessed foreign capital provides incentives for affluent households to reallocate wealth toward risky assets while impoverished households increase their debt. Wealth concentration ensues only if this rebalancing effect is large enough to counteract diminished return on domestic assets. Quantitative analysis suggests that global financial integration alone can account for a third to a half of the observed increase in the current top one percent wealth share in the US, but indicates a possible reversal in the future.

developpement economique --- georgie --- situation economique --- 307.0 --- 330.540 --- 330.548 --- 330.580 --- 331.30 --- 331.31 --- 338.047 --- GE / Georgia - Georgie --- 338.24 <479.22> --- 338 <479.22> --- 338 (47) --- 338 (47) Economische situatie. Economische structuur van bepaalde landen en gebieden. Economische geografie. Economische produktie.economische produkten. Economische diensten--Rusland. Sovjet-Unie --- Economische situatie. Economische structuur van bepaalde landen en gebieden. Economische geografie. Economische produktie.economische produkten. Economische diensten--Rusland. Sovjet-Unie --- 338.24 <479.22> Instrumenten van de economische politiek. Economische orde. Economisch politieke maatregelen. Stabilisering. Stimuleringsmaatregelen. Regulering. Financiele steunmaatregelen--Sovjetrepubliek Georgië --- Instrumenten van de economische politiek. Economische orde. Economisch politieke maatregelen. Stabilisering. Stimuleringsmaatregelen. Regulering. Financiele steunmaatregelen--Sovjetrepubliek Georgië --- 338 <479.22> Economische situatie. Economische structuur van bepaalde landen en gebieden. Economische geografie. Economische produktie.economische produkten. Economische diensten--Sovjetrepubliek Georgië --- Economische situatie. Economische structuur van bepaalde landen en gebieden. Economische geografie. Economische produktie.economische produkten. Economische diensten--Sovjetrepubliek Georgië --- economische ontwikkeling --- economische toestand --- Algemene statistische documentatie. Statistische jaarboeken. Grafieken. Statistische gegevensbanken --- Socialistische stelsels: algemeenheden --- Nationalisatie. Privatiseringen --- Gecontroleerde economie. Geleide economie. Welvaarststaat. Algemeenheden --- Economische toestand --- Economisch beleid --- Privé en openbare bedrijven. Openbare diensten. Gemengde economie --- Georgia (Republic) --- Republic of Georgia --- Sakʻartʻvelo (Republic) --- Sakʻartʻvelos Respublika --- Gruzyah (Republic) --- Cheorchia (Republic) --- Xorxa (Republic) --- Jorjia (Republic) --- Gürcüstan (Republic) --- Gruzie (Republic) --- Gruzínská republika --- Georgien (Republic) --- República de Georgia --- Kartvelio (Republic) --- Gruzio (Republic) --- Gruusia (Republic) --- Georgian tasavalta --- Lýðveldið Georgia --- Géorgie (Republic) --- Geörgje (Republic) --- An tSeoirsia --- tSeoirsia (Republic) --- Xeorxia (Republic) --- Republik Georgia --- Gruzija (Republic) --- Grúzia (Republic) --- Pow Grousi --- Gruzijas Republika --- Gruzja (Republic) --- Giorgia (Republic) --- Gruzínsko (Republic) --- Republika Gruzija --- Đurđija (Republic) --- Gürcistan (Republic) --- Georgän (Republic) --- Gjeorgjia (Republic) --- Грузия (Republic) --- Gruzii︠a︡ (Republic) --- Грузија (Republic) --- Грузія (Republic) --- Hruzii︠a︡ (Republic) --- Республіка Грузія --- Respublika Hruzii︠a︡ --- Γεωργία (Republic) --- Gu̇rzhīstan (Republic) --- Georgija (Republic) --- Georgian S.S.R. --- Economic conditions. --- Economic policy. --- International finance --- United States --- Macroeconomics --- Economics: General --- Globalization --- Investments: General --- Exports and Imports --- Finance: General --- Financial Aspects of Economic Integration --- Open Economy Macroeconomics --- Macroeconomics: Consumption --- Saving --- Wealth --- Financial Markets and the Macroeconomy --- Aggregate Factor Income Distribution --- Globalization: General --- Investment --- Capital --- Intangible Capital --- Capacity --- International Investment --- Long-term Capital Movements --- General Financial Markets: General (includes Measurement and Data) --- Economic & financial crises & disasters --- Economics of specific sectors --- Finance --- International economics --- Income distribution --- National accounts --- Income inequality --- Return on investment --- Foreign direct investment --- Balance of payments --- Currency crises --- Informal sector --- Economics --- Saving and investment --- Investments, Foreign --- Capital movements

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The US economy is often referred to as the “banker to the world,” due to its unique role in supplying global reserve assets and funding foreign risky investment. This paper develops a general equilibrium model to analyze and quantify the contribution of this role to rising wealth concentration among American households. I highlight the following points: 1) financial globalization raises wealth inequality in a financially-developed economy initially due to foreign capital pressing up domestic asset prices; 2) much of this increase is transitory and can be reversed as future expected returns on domestic assets fall; and 3) despite the low-interest-rate environment, newly accessed foreign capital provides incentives for affluent households to reallocate wealth toward risky assets while impoverished households increase their debt. Wealth concentration ensues only if this rebalancing effect is large enough to counteract diminished return on domestic assets. Quantitative analysis suggests that global financial integration alone can account for a third to a half of the observed increase in the current top one percent wealth share in the US, but indicates a possible reversal in the future.

United States

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Forecasting a macroframework, which consists of many macroeconomic variables and accounting identities, is widely conducted in the policy arena to present an economic narrative and check its consistency. Such forecasting, however, is challenging because forecasters should extend limited information to the entire macroframework in an internally consistent manner. This paper proposes a method to systematically forecast macroframework by integrating (1) conditional forecasting with machine-learning techniques and (2) forecast reconciliation of hierarchical time series. We apply our method to an advanced economy and a tourism-dependent economy using France and Seychelles and show that it can improve the WEO forecast.

Seychelles --- Macroeconomics --- Economics: General --- Exports and Imports --- Forecasting and Other Model Applications --- General Aggregative Models: Forecasting and Simulation --- Forecasting and Simulation: Models and Applications --- Current Account Adjustment --- Short-term Capital Movements --- Measurement and Data on National Income and Product Accounts and Wealth --- Environmental Accounts --- General Aggregative Models: General --- Economic & financial crises & disasters --- Economics of specific sectors --- International economics --- Current account balance --- Balance of payments --- GDP measurement --- National accounts --- Currency crises --- Informal sector --- Economics --- National income

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State-contingent debt instruments such as GDP-linked warrants have garnered attention as a potential tool to help debt-stressed economies smooth repayments over business cycles, yet very few studies of the empirical properties of these instruments exist. This paper develops a general f ramework to estimate the time-varying risk premium of a state-contingent sovereign debt instrument. Our estimation framework applied to GDP-linked warrants issued by Argentina, Greece, and Ukraine reveals three stylized facts: (i) the risk premium in state-contingent instruments is high and persistent; (ii) the risk premium exhibits a pro-cyclical pattern; and (iii) the liquidity premium is higher and more volatile than that for plain-vanilla government bonds issued by the same sovereign. We then present a model in which investors fear ambiguity and that can account for the cyclical properties of the risk premium.

Ukraine --- Macroeconomics --- Economics: General --- Investments: Bonds --- Investments: General --- Finance: General --- Financial Risk Management --- Debt --- Debt Management --- Sovereign Debt --- Contingent Pricing --- Futures Pricing --- option pricing --- Financial Markets and the Macroeconomy --- General Financial Markets: General (includes Measurement and Data) --- Portfolio Choice --- Investment Decisions --- Investment --- Capital --- Intangible Capital --- Capacity --- Economic & financial crises & disasters --- Economics of specific sectors --- Investment & securities --- Finance --- Sovereign bonds --- Financial institutions --- Securities --- Bonds --- Liquidity --- Asset and liability management --- Debt restructuring --- Currency crises --- Informal sector --- Economics --- Financial instruments --- Debts, External --- Saving and investment

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This paper explores how non-U.S. central banks behave when firms in their economies engage in currency mismatch, borrowing more heavily in dollars than justified by their operating exposures. We begin by documenting that, in a panel of 53 countries, central bank holdings of dollar reserves are significantly correlated with the dollar-denominated bank borrowing of their non-financial corporate sectors, controlling for a number of known covariates of reserve accumulation. We then build a model in which the central bank can deal with private-sector mismatch, and the associated risk of a domestic financial crisis, in two ways: (i) by imposing ex ante financial regulations such as bank capital requirements; or (ii) by building a stockpile of dollar reserves that allow it to serve as an ex post dollar lender of last resort. The model highlights a novel externality: individual central banks may tend to over-accumulate dollar reserves, relative to what a global planner would choose. This is because individual central banks do not internalize that their hoarding of reserves exacerbates a global scarcity of dollar-denominated safe assets, which lowers dollar interest rates and encourages firms to increase the currency mismatch of their liabilities. Relative to the decentralized outcome, a global planner may prefer stricter financial regulation (e.g., higher bank capital requirements) and reduced holdings of dollar reserves.

Hong Kong Special Administrative Region, People's Republic of China --- Macroeconomics --- Economics: General --- Banks and Banking --- Finance: General --- Foreign Exchange --- Financial Risk Management --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Macroeconomic Aspects of International Trade and Finance: General --- International Financial Markets --- Monetary Policy --- Financial Crises --- General Financial Markets: Government Policy and Regulation --- Financial Institutions and Services: Government Policy and Regulation --- Economic & financial crises & disasters --- Economics of specific sectors --- Banking --- Finance --- Currency --- Foreign exchange --- Financial crises --- Economic sectors --- International reserves --- Central banks --- Banking crises --- Currency mismatches --- Financial sector policy and analysis --- Reserves accumulation --- Exchange rates --- Currency crises --- Informal sector --- Economics --- Foreign exchange reserves --- Financial risk management --- Banks and banking, Central