TY - BOOK ID - 11263496 TI - U.S. Dollar Risk Premiums and Capital Flows AU - Balakrishnan, Ravi. AU - Tulin, Volodymyr. PY - 2006 SN - 1451864205 1462385117 1451984103 9786613821546 1452743088 1282448358 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Capital movements. KW - Dollar, American. KW - Electronic books. -- local. KW - Finance KW - Business & Economics KW - Money KW - Capital flight KW - Capital flows KW - Capital inflow KW - Capital outflow KW - Flight of capital KW - Flow of capital KW - Movements of capital KW - American dollar KW - Balance of payments KW - Foreign exchange KW - International finance KW - Exports and Imports KW - Foreign Exchange KW - Investments: General KW - Investments: Bonds KW - Investment KW - Capital KW - Intangible Capital KW - Capacity KW - General Financial Markets: General (includes Measurement and Data) KW - International Investment KW - Long-term Capital Movements KW - Macroeconomics KW - Investment & securities KW - International economics KW - Currency KW - Return on investment KW - Treasury bills and bonds KW - Corporate bonds KW - Exchange rates KW - Saving and investment KW - Government securities KW - Capital movements KW - Bonds KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:11263496 AB - This paper sheds light on the attractiveness of U.S. assets by studying dollar risk premiums, calculated using Consensus exchange rate forecasts, and linking them to bilateral capital flows. The paper finds that the presence of negative dollar risk premiums (i.e. expectations of a dollar depreciation net of interest rate effects) amid record capital inflows could suggest that investors may favor U.S. assets for structural reasons. One possible explanation could be that the Asian crisis created a large pool of savings searching for relatively riskless investment opportunities, which were provided by deep, liquid, and innovative U.S. financial markets with robust investor protection. Moreover, the continued attractiveness of U.S. financial markets to European investors suggests that they offer a large array of assets, with different risk/return characteristics, that facilitate the structuring of diversified investment portfolios. Looking forward, this suggests that the allocative efficiency of U.S. financial markets could mitigate risks of a disorderly unwinding of global current account imbalances. ER -