Country and Industry Dynamics in Stock Returns /

A perennial question in international finance is to what extent stock returns are influenced by country-location, as opposed to industry-affiliation, factors. This paper develops a novel methodology to measure these effects, in which portfolios mimicking "pure" country and industry factors...

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Autor principal: Catao, Luis
Altres autors: Timmermann, Allan
Format: Revista
Idioma:English
Publicat: Washington, D.C. : International Monetary Fund, 2003.
Col·lecció:IMF Working Papers; Working Paper ; No. 2003/052
Accés en línia:Full text available on IMF
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245 1 0 |a Country and Industry Dynamics in Stock Returns /  |c Luis Catao, Allan Timmermann. 
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520 3 |a A perennial question in international finance is to what extent stock returns are influenced by country-location, as opposed to industry-affiliation, factors. This paper develops a novel methodology to measure these effects, in which portfolios mimicking "pure" country and industry factors are first constructed and their joint dynamics then modeled as regime-switching processes. Estimation using global firm-level data allows us to identify well-defined volatility states over the past thirty years and shows that the contribution of the industry factor becomes systematically more prominent during high global volatility states, while the country factor contribution declines. Using the model's estimates, we find that portfolio diversification possibilities vary considerably across economic states. 
538 |a Mode of access: Internet 
700 1 |a Timmermann, Allan. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2003/052 
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