Why do investors hold such large positions in domestic equity when there are gains to be made from international diversification? This equity home bias puzzle has received considerable attention in the literature, with asymmetric information on domestic and foreign assets (whether by individual...

This paper addresses the dynamics of the Swedish external position, with a particular focus on its inter-relation with the external value of the krona. We argue that financial globalisation means that a broader conceptual framework is required, whereby exchange rate fluctuations operate through...

Despite the liberalization of international capital flows during the last decades, typical investors continue to hold most of their wealth in domestic assets. International RBC models can explain that 'portfolio home bias', if consumption home bias is incorporated, i.e. the fact that the bulk of...

Capital and labor are the primary components of country growth models. Little, however, is known about the empirical transitional dynamics and interdependency between capital flows and immigration flows. Are they substitutes or complements? Do they move contemporaneously across borders, or is...

This paper analyzes the determinants of international asset portfolios, using a neoclassical dynamic general equilibrium model with home bias in consumption. For plausible parameter values, the model explains the fact that typical investors hold most of their wealth in domestic assets (portfolio...

Using a database of 440 international political crises over the period 1918-2002, we find that international crises reduce world market stock returns by approximately four percent per annum. Crises cause large negative stock market reactions in their first month, lower than average returns...

Macroeconomic analyses of capital controls face a number of imposing challenges and have yielded mixed results to date. This paper takes a different approach and surveys an emerging literature that evaluates various microeconomic effects of capital controls and capital account liberalization....

We examine the bilateral composition of international bond portfolios for the euro area and the individual EMU member countries. We find considerable support for quot;euro area biasquot;: EMU member countries disproportionately invest in one another relative to other country pairs. Another...

Prior empirical evidence on the stock price response of exposed firms to contemporaneous changes in exchange rates is weak. This paper avoids many problems encountered in previous work by using event-study methods to examine the daily stock price reactions of exposed U.S. multinationals to...

The purpose of this paper is to examine the global currency wars of the day. Besides that, it explains the major currencies. The fear of currency wars and the ways of dealing with them is discussed. Impact of currency volatility on the Indian economy is also part of the discussion. With low...