We survey the literature on global capital allocation. We begin by reviewing the rise of cross-
border investment, the shift toward portfolio investment, and the literature focusing on …

We propose the currency hedging channel that connects countries' external imbalances to
their exchange rate behavior. We present a model in which investors increase their currency …

A review of recent advances in open economy analysis under segmented international
financial markets. A set of modeling tools that have been used to understand financial crises …

We analyze a large number of industry-and company-level filings of global institutional
investors to provide the first comprehensive estimate of foreign investors' US dollar (USD) …

We provide a systematic empirical analysis of short-term covered interest parity (CIP)
deviations for a large set of emerging market (EM) currencies. EM CIP deviations tend to be …

The rise in net international bond positions of non-US investors over the last decade can
account for the long-run surge in net dollar hedging positions in FX derivatives. The latter …

Observed patterns of international investment are difficult to reconcile with frictionless capital
markets. In this paper, we provide a quantitative theory of international capital allocation: a …

We examine a novel mechanism whereby the US dollar's global dominance can have a
large, unexpected impact on foreign Treasury yields in crisis periods. Non-US institutions …

We explore the consequences of global capital market segmentation by currency for the
optimal currency composition of borrowing by firms. Global bond portfolios are driven by the …

Using new SEC data, we study fund derivative use and its impact on performance. Despite
small portfolio weights, derivatives contribute largely to fund returns. Contrary to prior …