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Follow the Money

Brad Setser tracks cross-border flows, with a bit of macroeconomics thrown in.

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The U.S. Income Balance Puzzle

by Brad W. Setser and Michael Weilandt November 3, 2024

The long-standing surplus in the U.S. investment income account, often cited as evidence of  “exorbitant privilege,” is receding. It already goes away without the income from profit-shifting by U.S. multinationals.

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China
The Continuing Chinese Drag on the Global Economy
Trump's trade policies aren't the only reason for the slowdown in global trade …
Blog Post by Brad W. Setser July 18, 2019 Follow the Money
Ireland
Finding Ireland in the U.S. Balance of Payments Data ...
Turns out a small and very green island dominates financial flows from "other euro area countries."  Ireland's impact, of course, is a case study in the role that "trade-in-tax" plays in driving global trade and financial flows in today's global economy.
Blog Post by Brad W. Setser July 16, 2019 Follow the Money
United States
The Trump Tax Reform, As Seen in the U.S. Balance of Payments Data
The international side of the Tax Cuts and Jobs Act was a real reform, not just a straight-forward cut in the rate. It ended deferral, and shifted to a (mostly) territorial tax system. Yet, judging from the balance of payments data, it didn't get rid of the incentive for firms to offshore profits to low-tax jurisdictions. The global minimum is too low—and there are too many incentives to shift tangible assets abroad.
Blog Post by Brad W. Setser July 3, 2019 Follow the Money
  • China
    China’s Bizarre May Intervention Numbers
    With the Osaka Xi-Trump summit producing an indefinite "truce" that halts further escalation (at least for now), there is every reason to expect the yuan to remain stable. The intervention proxies (surprisingly) didn't show much activity in May, at the peak of the recent trade tension.
    Blog Post by Brad W. Setser July 1, 2019 Follow the Money
  • China
    President Xi, Still the Deglobalizer in Chief…
    Can China generate new friends by strategically opening its markets while…also importing less? (Don't judge China just by changes in its tariffs, the Chinese state has many other policy tools to limit imports)
    Blog Post by Brad W. Setser June 25, 2019 Follow the Money