Coeurdacier, Nicolas - Department of Economics, Sciences économiques - 2009
international equity portfolios in a two-country/two-good stochastic equilibrium model with trade costs in goods markets. We show … that introducing trade costs, as suggested by Obstfeld and Rogoff [Obstfeld, M., Rogoff, K., 2000a. The Six Major Puzzles … these two puzzles simultaneously. On the contrary, we find that trade costs create a foreign bias in portfolios for …