Do Foreign Purchases of U.S. Stocks Help the U.S. Stocks Market?

Date
2009
Authors
Lizardo, Radhames
Mollick, Andre Varella
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
This paper investigates the relationship between the U.S. S&P 500 stock market and purchases of U.S. corporation stocks by foreign investors. Estimations using monthly data from 1978:1 to 2008:7 under various methodologies show that, controlling for asset prices (interest rates and the yield curve) and inflation, purchases of U.S. stocks by foreign investors have a positive and statistically significant impact on the U.S. stock market performance. We also show that their relationship is time variant. In a global world, the demand-side variable captured by the foreign appetite for U.S. stocks attenuates the negative effects associated with the domestic forces.
Description
Keywords
Citation
Lizardo R. A., & Mollick, A. V. (2009). Do foreign purchases of U.S. Stocks help the U.S. stocks market? Journal of International Financial Markets, Institutions and Money, 19(5), 969-986. https://doi.org/10.1016/j.intfin.2009.08.002