A Solution to Two Paradoxes of International Capital Flows
---- Acknowledgements -----
We are grateful to Christian Broda, Jingqing Chai, Fabio Ghironi, Piere-Olivier Gourinchas, Kevin Grier, Kala Krishna, Maurice Obstfeld, Arvind Panagariya, Romain Rancier, Kenneth Rogoff and seminar/conference participants at the NBER Summer Institute, the Econometric Society Far Eastern Meeting, IMF, Graduate Institute of International Studies (Geneva), and University of Maryland for helpful discussions. All remaining errors are our own. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.