Series: IMF Working Papers
Author(s): Jonathan Adams , and Philip Barrett
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 22 December 2017
Keywords: Country portfolios, international business cycles, home bias, gross asset positions, exchange rates, Backus-Smith puzzle, General, Open Economy Macroeconomics
Most countries hold large gross asset positions, lending in domestic currency and borrowing in foreign. Thus, their balance sheets are exposed to nominal exchange rates. We argue that when asset markets are incompl...