Cross-country capital flows have increased greatly, since the liberalization of internationalcapital markets two decades ago. Equity home bias, while less severe than earlier, remains sizeableand is observed in all industrialized countries. There are broadly two classes of explanations for...

We document the recent phenomenon of uphill flows of capital from nonindustrial toindustrial countries and analyze whether this pattern of capital flows has hurt growth innonindustrial economies that export capital. Surprisingly, we find that there is a positivecorrelation between current...

Is the Chinese growth miracle - a remarkably high growth rate sustained for over twodecades - likely to persist or are the seeds of its eventual demise contained in the policiesthat have boosted growth? For all its presumed flaws, the particular approach tomacroeconomic and structural policies...

The use of different currencies in the invoicing of international trade transactions plays a major role in the international transmission of economic fluctuations. Existing studies argue that an exporter’s invoicing choice reflects structural aspects of her industry, such as market share and...

Cross-country regressions suggest little connection from foreign capital inflows to more rapid economic growth for developing countries and emerging markets. This suggests that the lack of domestic savings is not the primary constraint on growth in these economies, as implicitly assumed in the...

Market participants' risk attitudes, wealth and portfolio composition influence their positions in apegged foreign currency and, therefore, may have important effects on the sustainability of currencypegs. We analyze such effects in a global game model of currency crises with continuous...

This paper studies a dynamic model of crises with timing frictions that combines the mainaspects of Morris and Shin (1998) and Frankel and Pauzner (2000). The usual arguments forexistence and uniqueness of equilibrium cannot be applied. It is shown that the model has aunique equilibrium within...

This paper analyses predictions of a simple model of currency crises in which the peg will beabandoned when the currency overvaluation hits a certain threshold, unknown to the agents. Due tolearning about the threshold, some features usually observed in the data and identified with modelswith...

In a country with high probability of default, higher interest rates may render the currency lessattractive if sovereign default is costly. This paper develops that intuition in a simple model andestimates the effect of changes in interest rates on the exchange rate in Brazil using data from...

The financial crisis has re-ignited the fierce debate about the merits of financial globalizationand its implications for growth, especially for developing countries. The empirical literaturehas not been able to conclusively establish the presumed growth benefits of financialintegration. Indeed,...