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Goods Trade and International Equity Portfolios / Fabrice Collard, Harris Dellas, Behzad Diba, Alan Stockman.
- Format:
- Book
- Author/Creator:
- Collard, Fabrice.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w13612.
- NBER working paper series no. w13612
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2007.
- Summary:
- We show that international trade in goods is the main determinant of international equity portfolios and offers a compelling -- theoretically and empirically -- resolution of the portfolio home bias puzzle. The model implies that investors can achieve full international risk diversification if the share of wealth invested in foreign equity matches their country's degree of openness (the imports to GDP share). The empirical evidence strongly supports this implication.
- Notes:
- Print version record
- November 2007.
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