讲座：Global Safe Assets and the US Exorbitant Privilege
题 目：Global Safe Assets and the US Exorbitant Privilege
嘉 宾：陈泽丰 助理传授 北京大学光彩办理学院
掌管人：徐 玏 助理传授 上海交通大学安泰经济与办理学院
地 点：上海交通大学 徐汇校区安泰楼A507室
The US is the only large net borrower country in the world earning a positive net investment income, a phenomenon often referred as the exorbitant privilege. To rationalize this, I propose a different theory about the role of US in the international financial system being a service provider, in contrast to the conventional view of an insurance provider, which predicts the US exorbitant privilege would vanish during the financial crisis, not supported by data. I build a two-country model with financial friction to explain the dynamics of the US external balance sheet and the dollar exchange rate. In the model, world financial intermediaries demand US safe assets for their convenience value, but US intermediaries do not demand foreign safe assets. Under an aggregate symmetric financial shock, the rest of the world buys more safe assets from the US despite a rise in convenience yield, the dollar appreciates, and the US takes advantage by buying more equities from the rest of the world at a low price. I show my mechanism can quantitatively explain the data, while a real shock triggering risk-sharing dynamic cannot.
Zefeng Chen is an assistant professor at Guanghua School of Management, Peking University. Prior to join Guanghua, Zefeng obtained Ph.D degree in economics from Stanford University, and undergraduate degree in Mathematics from the University of Chicago. Zefeng’s research interest lies in international finance and macrofinance, particularly the dominant role of US dollars in the international financial market.