The paper develops a model of foreign direct investments (FDI) and foreign portfolio investments. FDI is characterized by hand-on management style which enables the owner to obtain relatively refined information about the productivity of the firm. This superiority, relative to portfolio...

Motivated by the unique experience of Israel of a supply-side shock of skilled migration, and the concurrent rise in disposable income inequality, this paper develops a model which can explain the mechanism through which a supply-side shock of skilled migration can reshape the political-economy...

A positive productivity shock in the host country tends typically to increase the volume of the desired FDI flows to the host country, through the standard marginal profitability effect. But, at the same time, such a shock may lower the likelihood of making any new FDI flows by the source...

It is well-known that, in the Mundell-Fleming model, capital mobility creates a channel through which permanent (transitory) shocks to aggregate demand such as fiscal and trade shocks are completely (partially) neutralized by the response of the real exchange rate. An important policy...

We study how commodity financialization affects information transmission in a commodity futures market. The trading of financial traders injects both information and noise into the futures price. In consequence, price informativeness in the futures market first increases and then decreases with...

This study examines a number of brief models that demonstrate potential disadvantages in the process of globalization of capital movements. Using Israeli data, we examine the extent to which Israel suffers from these disadvantages. One disadvantage is related to the transfer of negative shocks...

We show that the correlation across financial institutions is a major force that increases their overall fragility. Our model features a financial system with financial institutions individually prone to runs and interconnected through fire sales. Strategic complementarities within and across...