Both policy makers and researchers have devoted considerable attention in recent years to the large current account and capital account imbalances among OECD countries. In particular, the size of the United States current account deficit has attracted intense attention and spawned numerous explanations. There are undoubtedly many reasons for this deficit, including government fiscal policy imbalances, but one explanation that has not previously received much attention is that current account deficits and the matching capital inflows are responses to international flows of labor. Migrants must be equipped with machines, and the resulting demands for capital are likely, all else being equal, to generate cross-border flows of capital. This paper explores the extent to which migration-related capital flows can explain the movements and magnitudes of current and capital account imbalances in OECD countries.
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number
2745.
Find related papers by JEL classification: F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements F22 - International Economics - - International Factor Movements and International Business - - - International Migration
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