Perfect consumption risk sharing requires both, frictionless goods as well as frictionless financial market integration. This project aims at analyzing the consequences of both type of frictions for the allocation of risk across countries in a unified framework. To this end, the theoretical...

Gauging foreign (domestic) biases as the deviation of foreign (domestic) investors' actual portfolio allocation of a bond market from the same bond market's weight in global bond market, we investigate the determinants of foreign and domestic investment biases in 41 global bond markets. We find...