Working Paper: CEPR ID: DP18480
Authors: Sergio Florez-Orrego; Matteo Maggiori; Jesse Schreger; Ziwen Sun; Serdil Tinda
Abstract: We survey the literature on global capital allocation. We begin by reviewing the rise of cross-border investment, the shift towards portfolio investment, and the literature focusing on aggregate patterns in multilateral and bilateral positions. We then turn to the recent literature that uses micro-data to document patterns in global capital allocations. We focus on the importance of the currency of denomination of assets in international portfolios and the role that tax havens and offshore financial centers play in intermediating global capital. We conclude with directions for future research in this area.
Keywords: Tax Havens; Financial Centers; US Dollar; International Investment Positions
JEL Codes: F3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| cross-border financial positions increase (F65) | global capital allocation patterns evolve (F21) |
| currency of denomination (E42) | domestic and foreign investors allocate portfolios (G15) |
| tax havens (H26) | misrepresentation of global capital flows (F32) |
| segmentation of international financial markets (F30) | differential borrowing patterns of sovereigns and corporates (F34) |
| currency denomination influences investor behavior (F31) | foreign investors invest in dollar-denominated corporate bonds (F21) |