Using aggregate data on bilateral cross-border equity holdings, we investigate whether investors correctly hedge their over-exposure to domestic risk (the well-known equity home bias) by investing in foreign stock markets that have low correlation with their home stock market. To deal with the...

In a panel covering a large number of countries from 1970 to 2003, we show that population ageing, institutions, money and deviations from the Uncovered Interest Parity (UIP) influence developments in net capital flows. Population ageing is associated with net equity inflows, net outflows in...

This paper argues that a stable broad money demand for the euro area over the period 1980–2011 can be obtained by modelling cross border international portfolio allocation. As a consequence, model-based excess liquidity measures, namely the difference between actual M3 growth (net of the...