‘DARK MATTER’ IN THE EXTERNAL SECTOR OF THE UNITED STATES
‘DARK MATTER’ IN THE EXTERNAL SECTOR OF THE UNITED STATES

Summary/Abstract: The aim of this paper is to examine the ‘dark matter’ assets in the external sectorof the United States in the period 1999:Q1-2018:Q3. The paper investigates data onthe balance of payments and international investment position for the US and a groupof 18 economies. The research reveals that the US is a privileged economy with respectto foreign income on international investments. The rates of return on its foreign assetsare relatively higher, and the costs incurred on its foreign liabilities relatively lower,as compared with the benchmark group. This special privilege of the US relates toequity investments, especially foreign direct investments. Based on prevailing incomedifferentials substantial ‘dark matter’ assets of the US are estimated. Recognising such‘dark matter’ leads to the conclusion that the US is a foreign creditor, not debtor. Thefindings shed light on the puzzle as to why the US has a continuing ability to sustainits external position despite mounting foreign liabilities.

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