This study uncovers a cross-border financial diversification motive related to goods and services trade. Using the IMF … so to holdings of foreign equity. The empirical findings are in line with the predictions of a calibrated two-country two-goods …

-good framework with portfolio choice and with credit market imperfections that lead firms to issue both equities and debt securities …

rate fluctuations in the goods market influences foreign equity holdings. This study reconciles the theory with the …There has been controversy between (two-country) theory and the empirics about whether hedging against real exchange … exchange rate fluctuations. Further, our theory calls for a country's covariance-variance ratio to be constructed as the sum of …

aim of uncovering a single structural parameter, but theory suggests it could differ depending on the shock that drives …

from security-level data on U.S. portfolio holdings of foreign securities, we show that since the crisis, it is mostly the … debt securities. We also find a strong negative correlation between the foreign share of the U.S. financial bond portfolio …-issued structured securities with high-grade U.S. dollar-denominated financial debt issued from a small group of OECD countries (most …

foreign goods. Second, an increase in the foreign demand for U.S. assets. Both forces have contributed to steadily increasing … determination based on imperfect substitutability in both goods and asset markets, and to use it to interpret the past and explore …