TY - JOUR
AU1 - Lewis, Karen K
AB - Abstract Investors hold a substantially larger proportion of their wealth portfolios in domestic assets than standard portfolio theory would suggest, a phenomenon called “equity home bias.” In the absence of this bias, investors would optimally diversify domestic output risk using foreign equities. Therefore, consumption growth rates would tend to co-move across countries even when output growth rates do not. Empirically, however, consumption growth rates tend to have a lower correlation across countries than do output growth rates, a phenomenon I call “consumption home bias.” In this paper, I discuss these two biases and their potential relationship as suggested by the literature.
TI - Trying to Explain Home Bias in Equities and Consumption
JF - Journal of Economic Literature
DO - 10.1257/jel.37.2.571
DA - 1999-06-01
UR - https://www.deepdyve.com/lp/american-economic-association/trying-to-explain-home-bias-in-equities-and-consumption-35EsL0T0z9
SP - 571
EP - 608
VL - 37
IS - 2
DP - DeepDyve
ER -