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International capital flows - ScienceDirect
Source: sciencedirect.com
Article summary:
1. The article discusses the need for a general equilibrium portfolio balance model to analyze the implications of international asset trade since the early 1990s.
2. It develops the implications of portfolio choice for both gross and net international capital flows in a two-country dynamic stochastic general equilibrium (DSGE) model.
3. The analysis reveals that fluctuations in second moments affect capital flows only to the extent that they affect the portfolio choice of domestic and foreign investors differently, and that expected asset price changes play a role in financing external debt.
Article analysis:
The article is generally reliable and trustworthy, as it provides an in-depth analysis of international capital flows and their implications on portfolio choice. The author has provided evidence from other sources to support his claims, such as Obstfeld (2007), Gourinchas (2006), and Gourinchas and Rey (2007). Furthermore, he has presented both sides of the argument equally by discussing how expected returns can affect capital flows but also noting that several factors driving expected return differences have no bearing on capital flows.
The article does not appear to be biased or one-sided, as it presents a balanced view of the topic at hand. It does not contain any promotional content or partiality towards any particular viewpoint or opinion. Additionally, possible risks are noted throughout the article, such as when discussing how third-order terms can be relevant in certain contexts like portfolio choice.
The only potential issue with this article is that it does not explore counterarguments or missing points of consideration in depth. While it does present both sides of the argument equally, it does not delve into any unexplored counterarguments or provide further evidence for its claims beyond what was already mentioned above.