We examine the link between the net foreign asset position, the trade balance and the real exchange rate. In particular, we decompose the impact of a country's net foreign asset position ('external wealth') on its long-run real exchange rate into two mechanisms: the relation between external...

We explore the role of financial openness - capital account openness and gross capital inflows - and a newly constructed gravity-based contagion index to assess the importance of these factors in the run-up to currency crises. Using a quarterly data set of 46 advanced and emerging market...

Sunk costs of entry create a wedge between the real exchange rate for which a foreign exporter enters the domestic market, and that for which he exits. On the macroeconomic level, heterogeneous cost structures make the number of entry and exit thresholds approach a continuum: any movement of the...

In this paper, we question whether there is a catch-up effect or announcement effect in Foreign Direct Investment (FDI) from the European Union (EU) to the ten EU accession countries. We study FDI outflows from the Netherlands, a small open economy with few historical ties to Eastern Europe, and...

Population aging and pension reform will have profound effects on international capital markets. First, demographic change alters the time path of aggregate savings within each country. Second, this process may be amplified when a pension reform shifts old-age provision towards more pre-funding....

We investigate to what extent the expansion of FDI and the internationalization of production can be related to the recent phenomenon of more synchronized business cycles. We first focus on the relationship between bilateral FDI positions and cross-country output correlations in the period 1982-...

We investigate to what extent the expansion of FDI and the internationalization of production can be related to the recent phenomenon of more synchronized business cycles. We first focus on the relationship between bilateral FDI positions and cross-country output correlations in the period...

This paper investigates the relationship between foreign direct investment (FDI) and business cycle synchronization in the period 1982-2010 for eight industrialized countries. We find that more synchronized business cycles are associated with stronger FDI relations during 1995-2010, but that...

Using a new, comprehensive database on bank ownership, identifying also the home country of foreign banks, for 137 countries over the period 1995-2009, this paper provides an overview of foreign bank activity and its impact of financial development and stability. We document substantial...

This paper develops and tests a theoretical model that allows for the endogenous decision of banks to engage in international and global banking. International banking, where banks raise capital in the home market and lend it abroad, is driven by differences in factor endowments across...