Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
This paper investigates the impacts of level and growth rate productivity shocks on the cyclical dynamics of gross portfolio flows between two economies using an endogenous portfolio choice problem within a DSGE framework. We find that the level shocks yield procyclical gross equity flows, while the growth rate shocks produce countercyclical flows. These dynamics cannot be replicated by only employing persistent shocks to the level of productivity.