International Investment Patterns

48 Pages Posted: 3 Jun 2005

See all articles by Philip R. Lane

Philip R. Lane

Trinity College (Dublin) - Department of Economics; Centre for Economic Policy Research (CEPR); Central Bank of Ireland

Gian Maria Milesi-Ferretti

International Monetary Fund (IMF); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2004

Abstract

We provide a systematic analysis of bilateral, source and host factors driving portfolio equity investment across countries, using newly-released data on international equity holdings at the end of 2001. We develop a model that links bilateral equity holdings to bilateral trade in goods and services and find that the data strongly support such a correlation. Larger bilateral positions are also associated with proxies for informational proximity. We further document that the scale of aggregate foreign equity asset and liability holdings is larger for richer countries and countries with more developed stock markets.

Keywords: International portfolio equity investment, international trade, gravity

Suggested Citation

Lane, Philip R. and Milesi-Ferretti, Gian Maria, International Investment Patterns (June 2004). IIIS Discussion Paper No. 24. Available at SSRN: https://ssrn.com/abstract=735186 or http://dx.doi.org/10.2139/ssrn.735186

Philip R. Lane (Contact Author)

Trinity College (Dublin) - Department of Economics ( email )

Trinity College
Dublin 2
Ireland
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+353 1 677 2503 (Fax)

Centre for Economic Policy Research (CEPR)

London
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Central Bank of Ireland ( email )

P.O. Box 559
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Ireland

Gian Maria Milesi-Ferretti

International Monetary Fund (IMF) ( email )

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202-589-7441 (Fax)

National Bureau of Economic Research (NBER)

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United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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