@article{Wincoop:295143,
      recid = {295143},
      author = {Wincoop, Eric van and Tille, Cédric},
      title = {International capital flows under dispersed information  theory and evidence},
      publisher = {National Bureau of Economic Research},
      address = {Cambridge, MA. 2008},
      number = {BOOK},
      series = {NBER Working Paper ; No. 14390},
      pages = {51 p. : ill.},
      year = {2008},
      abstract = {We develop a new theory of international capital flows  based on dispersed information across individual investors.  There is extensive evidence of information heterogeneity  within and across countries, which has proven critical to  understanding asset price behavior. We introduce  information dispersion into an open economy dynamic general  equilibrium portfolio choice model, and emphasize two  implications for capital flows that are specific to the  presence of dispersed information. First, gross and net  capital flows become partially disconnected from publicly  observed fundamentals. Second, capital flows (particularly  gross flows) contain information about future fundamentals,  even after controlling for current fundamentals. We find  that these implications are quantitatively significant and  consistent with data for industrialized countries.},
      url = {http://repository.graduateinstitute.ch/record/295143},
      doi = {https://doi.org/10.3386/W14390},
}