Agustín Bénétrix

By:Simone Arrigoni and Agustín Bénétrix

Abstract: This paper studies whether bilateral portfolio equity integration is associated with convergence or divergence in wealth distributions across countries. We combine bilateral portfolio equity positions from the IMF’s Portfolio Investment Positions database with wealth-share data from the World Inequality Database for 2001–2023. For each country pair, we relate bilateral equity exposure to gaps in the wealth shares of the Bottom 50%, Middle 40%, Next 9%, and Top 1%. Stronger bilateral integration is not associated with broad-based convergence. It is associated with wider wealth-share gaps for the Middle 40% and Next 9%, but not for the Bottom 50% or Top 1%. Once differences in aggregate national wealth are incorporated, these effects disappear and the main result shifts to the Top 1%, whose wealth-weighted gap widens. Decomposition results point to distinct distributional and aggregate-wealth channels, while country-pair estimates reveal substantial heterogeneity by level of development and direction of investment. Our findings add a bilateral dimension to the literature on financial globalisation and wealth inequality.

Links/Downloads: Working paper coming soon