I. Introduction; II. Literature Survey; A. Home Bias; Figures; 1. Sources of Financing for the U.S. Current Account Deficit; B. Determinants of Equity Flows; C. Fixed Income Flows and Bond Yields; III. Theoretical Model; IV. Data; 2. Japan -- Holdings of Long-Term U.S. Bond Debt; V. Empirical Estimation; Tables; 1. Summary Statistics for Period 1 Data (1/95-12/01); 2. Summary Statistics for Period 2 Data (1/02-4/06); 3. Correlations Between Interest Spreads and Exchange Rate Expectations; VI. Identification Issues; VII. Panel Instrumental Variable Estimates
4. Pooled Two-Stage Least Squares Regressions5. Fixed Effects Two-Stage Least Squares Regressions; VIII. Panel VARs and Impulse Response Functions; 6. "Partial Fixed Effects" 2SLS Regressions; 7. Correlation Coefficients and Std Dev of Residuals from Pd 2 VAR; IX. Conclusion; 3. Impulse Response Functions; Appendix; Panel Estimates Without Instrumental Variables
Summary
To assess the conditions for the financing of the U.S. current account, this paper analyzes the determinants of bond flows into the United States, using a data set constructed for the period 1994-2006 from U.S. Treasury International Capital Flows (TIC) statistics. Panel vector autoregression and instrumental variables approaches are used to estimate the impact of changes in interest rate differentials and other fundamentals on capital flows into the U.S. The paper finds evidence for an impact from interest rate differentials to bond inflows that has increased over time, consistent with a theoretical model of declining home bias
Bibliography
Includes bibliographical references (page 21)
Notes
Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. http://purl.oclc.org/DLF/benchrepro0212 MiAaHDL
digitized 2010 HathiTrust Digital Library committed to preserve pda MiAaHDL
