Portfolio theory has been an important component of open economy macroeconomic models. In those models, it is essential to distinguish among several categories of assets, both foreign and domestic, and to specify the demands and supplies. This framework has become increasingly relevant. Movements of capital across regional and national boundaries, and across currencies, have exploded in volume, thanks to the dismantling of currency and exchange controls and other financial regulations and to revolutionary economies in technologies of communication and transactions. The globalization of financial markets was stimulated by the floating exchange rate regime established in 1973.
Keywords: Portfolio choice, open economy, capital mobility, exchange rate
This paper establishes the asymptotic normality of series estimators for nonparametric regression models. Gallant’s Fourier flexible form estimators, trigonometric series estimators, and polynomial series estimators are prime examples of the estimators covered by the results. The results apply to a wide variety of estimands in the regression model under consideration, including derivatives and integrals of the regression function. The errors in the model may be homoskedastic or heteroskeclastic. The paper also considers series estimators for additive interactive regression (AIR), seimparametric regression, and semiparametric index regression models and shows them to be consistent and asymptotically normal. All of the consistency and asymptotic normality results in the paper follow from one set of general results for series estimators.