Discussion of "Capital mobility and international sharing of cyclical risk"

This is a comment on "Capital mobility and international sharing of cyclical risk." The comment focuses on the authors' choice of portfolio adjustment costs in explaining limited international risk sharing. The comment raises two main issues. One is that investors hold large gross positions that vary significantly in value over the business cycle. The second is that it is difficult to identify portfolio adjustment costs from trade costs within the authors' environment. (c) 2012 Elsevier B.V. All rights reserved.