Global Spillovers of Asset Price Booms : Who Benefits from the End of Privilege?

The U.S. equity boom and sustained dollar appreciation have led to large valuation gains for the rest of the world on the U.S. net foreign asset position. In this paper, I construct their global distribution, carefully accounting for the role of tax havens. Valuation gains are concentrated and large in developed countries, while developing countries have been largely bypassed. To assess the welfare implications of these capital gains, I adopt a sufficient statistics approach. In contrast to the large wealth changes, most countries so far did not benefit in welfare terms. This is because they did not rebalance their portfolios and realize their gains, while they were further hurt by rising import prices from the strong dollar