MARC Record from Library of Congress

LEADER: 02177cam a22002777a 4500
001 2008610765
003 DLC
005 20080814092115.0
007 cr |||||||||||
008 080625s2008 mau sb 000 0 eng
010 $a 2008610765
040 $aDLC$cDLC
050 00 $aHB1
100 1 $aForbes, Kristin.
245 10 $aWhy do foreigners invest in the United States?$h[electronic resource] /$cKristin J. Forbes.
260 $aCambridge, MA :$bNational Bureau of Economic Research,$cc2008.
490 1 $aNBER working paper series ;$vworking paper 13908
538 $aSystem requirements: Adobe Acrobat Reader.
538 $aMode of access: World Wide Web.
500 $aTitle from PDF file as viewed on 6/25/2008.
530 $aAlso available in print.
504 $aIncludes bibliographical references.
520 3 $a"Why are foreigners willing to invest almost $2 trillion per year in the United States? The answer affects if the existing pattern of global imbalances can persist and if the United States can continue to finance its current account deficit without a major change in asset prices and returns. This paper tests various hypotheses and finds that standard portfolio allocation models and diversification motives are poor predictors of foreign holdings of U.S. liabilities. Instead, foreigners hold greater shares of their investment portfolios in the United States if they have less developed financial markets. The magnitude of this effect decreases with income per capita. Countries with fewer capital controls and greater trade with the United States also invest more in U.S. equity and bond markets, and foreign investors "chase returns" in their purchases of U.S. equities (although not bonds). The empirical results showing a primary role of financial market development in driving foreign purchases of U.S. portfolio liabilities supports recent theoretical work on global imbalances"--National Bureau of Economic Research web site.
710 2 $aNational Bureau of Economic Research.
830 0 $aWorking paper series (National Bureau of Economic Research : Online) ;$vworking paper no. 13908.
856 40 $uhttp://papers.nber.org/papers/w13908