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The home bias of the poor: Foreign asset portfolios across the wealth distribution
Stockholm University, Faculty of Social Sciences, Institute for International Economic Studies.
2017 (English)In: European Economic Review, ISSN 0014-2921, E-ISSN 1873-572X, Vol. 92, 74-91 p.Article in journal (Refereed) Published
Abstract [en]

This paper documents how the share of foreign stocks in US household portfolios rises with the ratio of financial wealth to non-financial income. This is both because wealthier households are more likely to participate in foreign asset markets, and because portfolio shares of participants increase with financial wealth but decrease with non-financial income. A simple, standard two-country general equilibrium model shows that hedging of terms of trade movements and non-financial income risk produces non-trivial heterogeneity in portfolios across the wealth and income distribution within countries that is qualitatively in line with this evidence.

Place, publisher, year, edition, pages
2017. Vol. 92, 74-91 p.
Keyword [en]
Portfolio choice, Home bias, Household finance, Inequality, International asset diversification
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:su:diva-140916DOI: 10.1016/j.euroecorev.2016.11.008ISI: 000395600400005OAI: oai:DiVA.org:su-140916DiVA: diva2:1083835
Available from: 2017-03-22 Created: 2017-03-22 Last updated: 2017-05-02Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
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