The International Equity Holdings of Euro Area Investors

30 Pages Posted: 7 Aug 2006

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)

Date Written: December 2005

Abstract

We provide a systematic analysis of bilateral, source and host factors driving portfolio equity investment by euro-area countries, using newly-released data on international equity holdings at the end of 2001. We find that bilateral equity holdings are strongly linked to bilateral trade in goods and services and are also associated with proxies for informational proximity. We further document that there exists a significant "euro-area bias," with euro-area countries investing in other euro-area countries over and above the amount predicted by underlying fundamentals.

Keywords: International portfolio equity investment, international trade, gravity

JEL Classification: F21, F34

Suggested Citation

Lane, Philip R. and Milesi-Ferretti, Gian Maria, The International Equity Holdings of Euro Area Investors (December 2005). IIIS Discussion Paper No. 104. Available at SSRN: https://ssrn.com/abstract=922257 or http://dx.doi.org/10.2139/ssrn.922257

Philip R. Lane (Contact Author)

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

Trinity College
Dublin 2
Ireland
+353 1 608 2259 (Phone)
+353 1 677 2503 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Central Bank of Ireland ( email )

P.O. Box 559
Dame Street
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Ireland

Gian Maria Milesi-Ferretti

International Monetary Fund (IMF) ( email )

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202-623-7441 (Phone)
202-589-7441 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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