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Citation |
Faria A, Mauro P, Lane PR, Milesi‐Ferretti GM. J. Eur. Econ. Assoc. 2007; 5(2‐3): 480-490. |
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Copyright |
(Copyright © 2007, European Economic Association, Publisher John Wiley and Sons) |
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DOI |
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PMID |
unavailable |
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Abstract |
What determines the composition of external liabilities, both across countries and over time? More specifically, which countries account for the massive increase in equity-like liabilities (foreign direct investment and portfolio equity), especially since the mid 1990s? The empirical analysis draws on the newly released “External Wealth of Nations Mark II” dataset. In the cross-section, we find that larger, more open economies with a better institutional quality score have a greater equity share in external liabilities, which is also positively related to natural resource production. Along the time-series dimension, we find that the shift towards equity financing is stronger among those countries that have undertaken a greater degree of domestic financial reform. (JEL: F21, F34, F36) |