Balakrishnan, Ravi; Tulin, Volodymyr; Bayoumi, Tamim - International Monetary Fund (IMF) - 2007
This paper examines the roles of U.S. financial innovation, financial globalization, and the savings glut hypothesis in explaining the rise in U.S. external debt, first in a portfolio balance model, and then empirically. Perhaps surprisingly, financial deepening and falling home bias in...