Asset Prices and Current Account Imbalances: A Neo-Hobsonian Analysis of the United States

Yubo Xu and Anthony William Donald Anastasi

International Journal of Economics and Finance, 2026, vol. 18, issue 4, 37

Abstract: In an increasingly fragmented global economic landscape, both advanced and developing countries have intensified trade restrictions on surplus nations to safeguard domestic industries and to try to achieve balanced international accounts. Utilizing a Neo-Hobsonian theoretical framework, this study investigates whether inflation in asset prices, driven by international capital flows from high-saving nations to lower-saving nations, notably the United States, reduces domestic savings relative to investment and exacerbates current account deficits. Employing comprehensive data from 2010 to 2024, including major asset price indicators- the S&P 500, Dow Jones Industrial Average, and housing prices, we conduct rigorous empirical analyses, alongside extensive robustness checks. Our findings highlight a significant negative impact of asset prices, especially the S&P 500 and housing prices, on the U.S. current account balance. These results robustly support the hypothesis that capital inflows, primarily driven by foreign investments in U.S. assets, substantially influence trade flows and current account dynamics. By addressing existing inconsistencies in the literature and utilizing the latest available data, this study fills a critical gap, enhancing our understanding of global financial imbalances and providing valuable insights for international macroeconomic policy formulation.

Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ccsenet.org/journal/index.php/ijef/article/download/0/0/52947/57732 (application/pdf)
https://ccsenet.org/journal/index.php/ijef/article/view/0/52947 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ibn:ijefaa:v:18:y:2026:i:4:p:37

Access Statistics for this article

More articles in International Journal of Economics and Finance from Canadian Center of Science and Education Contact information at EDIRC.
Bibliographic data for series maintained by Canadian Center of Science and Education ().