Financial Development and the Patterns of International Capital Flows
AbstractWe develop a tractable two-country overlapping-generations model and show that cross-country differences in financial development can explain three recent empirical patterns of international capital flows: Financial capital flows from relatively poor to relatively rich countries while foreign direct investment fl ows in the opposite direction; net capital flows go from poor to rich countries; despite of its negative net international investment positions, the United States receives a positive net investment income. We also explore the welfare and distributional effects of international capital fl ows and show that the patterns of capital fl ows may reverse along the convergence process of a developing country.
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Bibliographic InfoPaper provided by Singapore Management University, School of Economics in its series Working Papers with number 21-2011.
Length: 24 pages
Date of creation: Dec 2011
Date of revision:
Publication status: Published in SMU Economics and Statistics Working Paper Series
Other versions of this item:
- Juergen von Hagen & Haiping Zhang, 2010. "Financial Development and the Patterns of International Capital Flows," Working Papers 02-2010, Singapore Management University, School of Economics.
- von Hagen, Jürgen & Zhang, Haiping, 2010. "Financial Development and the Patterns of International Capital Flows," CEPR Discussion Papers 7690, C.E.P.R. Discussion Papers.
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-10 (All new papers)
- NEP-CBA-2012-04-10 (Central Banking)
- NEP-DGE-2012-04-10 (Dynamic General Equilibrium)
- NEP-OPM-2012-04-10 (Open Economy Macroeconomic)
- NEP-SEA-2012-04-10 (South East Asia)
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