Article: Does the center country of the International Monetary System enjoy an "exorbitant privilege" that significantly weakens its external constraint, as has been asserted in some European quarters?(Conferences)(Brief Article)

Does the center country of the International Monetary System enjoy an "exorbitant privilege" that significantly weakens its external constraint, as has been asserted in some European quarters? Using a newly constructed dataset, Gourinchas and Rey perform a detailed analysis of the historical evolution of U.S. external assets and liabilities at market value since 1952. They find strong evidence of a sizeable excess return of gross assets over gross liabilities. Interestingly, this excess return has increased after the collapse of the Bretton Woods fixed exchange rate system. It is mainly attributable to a "return discount": within each class of assets, the total return ...

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