Institutional Affiliation: Harvard University
NBER Working Papers and Publications
|March 2020||Redrawing the Map of Global Capital Flows: The Role of Cross-Border Financing and Tax Havens|
with Matteo Maggiori, Brent Neiman, Jesse Schreger: w26855
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 portfolio investment from developed countries to firms in large emerging markets is 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 dollars, while China’s official net creditor position to the rest of the world is overstated by about 50 percent. We additionally show how taking account of offshore...