An explanation for the widely-observed phenomenon of home country asset preference is provided by the existence of government debt. Domestic government debt implies future taxes for domestic residents. Since no market exists for the statutory obligation to pay taxes, the present value of future...

The hypothesis that the forward rate is an unbiased predictor of the future spot rate has been rejected in many empirical studies. The rejection of this hypothesis could occur because market behavior is inconsistent with rational--expectations or because there exists a risk premium. Equations...

Large external imbalances have become a policy concern. This study investigates the determinants of external balances for regions within a single country--Canadian provinces--as well as for a sample of 18 OECD countries. External balance adjustment may differ for provinces since there are few...