The relationship between international payments and the real exchange rate-the transfer problem-is a classic question in international economics. We use cross-country data on real exchange rates and a newly constructed data set on countries' net external positions to shed new light on this...

We provide a systematic analysis of the bilateral factors driving portfolio equity holdings across countries. We find that bilateral equity holdings are strongly correlated with bilateral trade in goods and services. Larger bilateral positions are also associated with proxies for informational...

Several authors have recently investigated the predictability of exchange rates by fitting a sequence of long-horizon error-correction equations. We show by means of a simulation study that, in small to medium samples, inference from this regression procedure depends on the null hypothesis that...