This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

Journal of Economic Literature: Vol. 51 No. 1 (March 2013)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter Subscription Information
(Institutional Administrator Access)

Explore:

JEL - All Issues

JEL Forthcoming Articles JEL Indexes (Members Only)

Home Bias in Open Economy Financial Macroeconomics

Article Citation

Coeurdacier, Nicolas, and Hélène Rey. 2013. "Home Bias in Open Economy Financial Macroeconomics." Journal of Economic Literature, 51(1): 63-115.

DOI: 10.1257/jel.51.1.63

Abstract

Home bias is a perennial feature of international capital markets. We review various explanations of this puzzling phenomenon highlighting recent developments in macroeconomic modeling that incorporate international portfolio choices in standard twocountry general equilibrium models. We refer to this new literature as Open Economy Financial Macroeconomics. We focus on three broad classes of explanations: (i) hedging motives in frictionless financial markets (real exchange rate and nontradable income risk), (ii) asset trade costs in international financial markets (such as transaction costs or differences in tax treatments between national and foreign assets), and (iii) informational frictions and behavioral biases. Recent theories call for new portfolio facts beyond equity home bias. We present new evidence on cross-border asset holdings across different types of assets: equities, bonds and bank lending and new micro data on institutional holdings of equity at the fund level. These data should inform macroeconomic modeling of the open economy and a growing literature of models of delegated investment. (JEL E13, F41, G11, G12, G15)

Article Full-Text Access

Full-text Article

Authors

Coeurdacier, Nicolas (Sciences Po, Paris)
Rey, Hélène (London Business School)

JEL Classifications

E13: General Aggregative Models: Neoclassical
F41: Open Economy Macroeconomics
G11: Portfolio Choice; Investment Decisions
G12: Asset Pricing; Trading volume; Bond Interest Rates
G15: International Financial Markets


Journal of Economic Literature


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

JEL - All Issues

JEL - Forthcoming Articles

JEL Indexes (Members Only)


Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us