"The dramatic increase in gross stock of foreign assets and liability has revived interest in the portfolio balance theory of international investment. Evidence on the validity of this theory has always been scarce and inconclusive. The current paper derives testable empirical implications from...

"Financial globalization has increased dramatically over the past three decades, particularly different capital control regimes, as well as from a range of persistent factors, including different degrees of institutional quality and domestic financial development. While, in principle, financial...