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International Portfolios, Current Account Dynamics and Capital Accumulation

  • Robert Kollmann

    (ECARES, Universite Libre de Bruxelles, University of Paris XII & CEPR)

  • Nicolas Coeurdacier

    (London Business School and CEPR)

abstract from capital, equity home bias is not sensitive to preference parameters. In the model, NFA changes are largely driven by capital gains/losses due to movements in equity prices. The model thus matches the high volatility and low serial correlation of NFA changes. We compare settings with complete and incomplete financial markets. Imperfect hedging is required to generate a realistic conventional current account measure that solely reflects aggregate net flows of assets between countries.

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Paper provided by Society for Economic Dynamics in its series 2008 Meeting Papers with number 817.

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Date of creation: 2008
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Handle: RePEc:red:sed008:817
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Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/society.htm
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