International investment positions: a cross-sectional analysis

We explore some empirical properties of the level and composition of gross international investment positions. In a cross-section of countries, we fin d that more open countries with larger domestic financial markets tend to h old greater quantities of foreign assets and liabilities. There is some evi dence that cross-holdings are positively correlated with inflation volatili ty but negatively correlated with terms of trade volatility. (C) 2000 Elsev ier Science Ltd. All rights reserved, JEL classification: F02; F21; F42; G1 5.