Using panel data of firms located in Europe (Amadeus), we compare returns of affiliates of US and non-US multinationals, and explore the sources of their differences. It turns out that US affiliates have 14% higher sales to assets than affiliates of non-US multinational, controlling by...

This paper identifies a credit-supply contraction that arises endogenously after trade liberalization. Banks with loan portfolios concentrated in sectors exposed to competition from China face an increase in non-performing loans after China's entry into the World Trade Organization. As a result,...

This paper analyzes how sovereign risk affects government's ability to smooth domestic risk when policy tools imperfectly discriminate foreign and domestic agents. The government cannot choose to pay differently foreign and domestic bond holders; however it can imperfectly discriminate against...

This paper explores the aggregate consequences of Foreign Direct Investment (FDI) on the opportunities for risk diversification available to consumers. The crucial difference between FDI and other international financial flows is that the former involves technology flows across countries. We...

Credit contracts in developing countries are often denominated in foreign currencies, even after many of these economies succeeded incontrolling inflation. This paper proposes a new interpretation of this apparent puzzle based on the demand for insurance against real shocks: The fact that...