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International Portfolios, Current Account Dynamics and Capital Accumulation

Author

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  • Robert Kollmann

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

  • Nicolas Coeurdacier

    (London Business School and CEPR)

Abstract

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.

Suggested Citation

  • Robert Kollmann & Nicolas Coeurdacier, 2008. "International Portfolios, Current Account Dynamics and Capital Accumulation," 2008 Meeting Papers 817, Society for Economic Dynamics.
    • Handle: RePEc:red:sed008:817
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    References listed on IDEAS

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    Cited by:

    1. Devereux, Michael B. & Sutherland, Alan, 2010. "Valuation effects and the dynamics of net external assets," Journal of International Economics, Elsevier, vol. 80(1), pages 129-143, January.

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