Citation

Discussion Paper Details

Please find the details for DP8811 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: The home bias of the poor: Terms of trade effects and portfolios across the wealth distribution

Author(s): Tobias Broer

Publication Date: February 2012

Keyword(s): Heterogeneous Agents, Home Bias, Portfolio Choice and Terms of Trade

Programme Area(s): International Macroeconomics

Abstract: This paper documents how the share of foreign stocks in US household portfolios rises with the ratio of financial wealth to non-financial income. This is both because wealthier households are more likely to participate in foreign asset markets, and because portfolio shares of participants increase with financial wealth but decrease with non-financial income. A simple, standard two-country general equilibrium model shows that hedging of terms of trade movements and non-financial income risk produces non-trivial heterogeneity in portfolios across the wealth and income distribution within countries that is qualitatively in line with this evidence.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8811

Bibliographic Reference

Broer, T. 2012. 'The home bias of the poor: Terms of trade effects and portfolios across the wealth distribution'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8811