A workhorse two-country portfolio model that embeds net foreign asset (NFA) imbalances rationalizes the following observation: debtor countries have on average a less diversified international portfolio than creditor countries. Abstracting from NFA imbalances, the model would feature a...

We introduce shocks to the availability of US dollar funding for non-US financial intermediaries in a two-country New Keynesian model with financial frictions. Such dollar shortages lead to uncovered interest rate parity deviations and have a significant negative effects on the macroeconomy....

Do sanctions strengthen the targeted regime? I analyze the 2014 imposition of Western sanctions on Russia and its impact on voting. The United States and the European Union introduced targeted measures against Russian entities and individuals related to President Putin’s regime. Using polling...

Highly interconnected global supply chains make countries vulnerable to supply chain disruptions. In this paper, we estimate the macroeconomic effects of global supply chain shocks for the euro area. Our empirical model combines business cycle variables with data from international container...

This paper investigates whether foreign direct investment (FDI) inflows are higher in countries ruled by trustworthy-looking or competent-looking leaders. After collecting pictures of 276 nondemocratic leaders in office between 1975 and 2010, we use a computer-based survey to assess how these...

This paper sheds light on the effectiveness of policies addressing high non-performing loans (NPLs). Using data on ownership of subsidiaries of foreign banks in Emerging Europe, we first show that changes in NPLs of parent banks are associated with changes in NPLs of their foreign affiliates,...

Western sanctions exposed Russia’s key vulnerabilities - dependence on Western capital and advanced technology, with knock-on effects in other sectors. In response, Russia launched a policy of import substitution and attempted to diversify to non-Western countries to mitigate the impact of...