Matteo Maggiori (Stanford University)
Global ﬁrms ﬁnance themselves through foreign subsidiaries, often shell companies in tax havens, which obscures their nationality in aggregate statistics. We associate the universe of traded securities with their issuer’s ultimate parent and restate bilateral investment positions to better reﬂect the true ﬁnancial linkages connecting countries around the world. We ﬁnd that private capital ﬂows from developed countries to ﬁrms in large emerging markets are dramatically larger than previously thought. The national accounts of the United States, for example, understate the U.S. position in Chinese ﬁrms by nearly $600 billion, while China’s oﬃcial net creditor position to the rest of the world may be overstated by as much as 50 percent. We additionally show how taking account of oﬀshore issuance is important for our understanding of the currency composition of external liabilities, the nature of foreign direct investment, and the growth of ﬁnancial globalization.
Antonio Coppola (Harvard University) Matteo Maggiori (Stanford University) Brent Neiman (University of Chicago ) Jesse Schreger (Columbia Business School)
Lecture Hall (A-032)