van Wincoop, Eric; Warnock, Francis E. - 2006
Obstfeld and Rogoff (2000) have reinvigorated an old literature on the link between home bias in the goods markets and … home bias in the asset market by arguing that trade costs in the goods market can account for the observed portfolio home … bias. The key link between home bias in the two markets is the real exchange rate. Home bias in consumption implies a …