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Country Portfolios

Author

Listed:
  • Aart Kraay

    (The World Bank)

  • Norman Loayza

    (The World Bank)

  • Luis Servén

    (The World Bank)

  • Jaume Ventura

    (CREI and Universitat Pompeu Fabra)

Abstract

Capital flows to developing countries are small and mostly take the form of loans rather than direct foreign investment. We build a simple model of North-South capital flows that highlights the interplay between diminishing returns, production risk, and sovereign risk. This model generates a set of country portfolios and a world distribution of capital stocks that resemble those in the data. (JEL: F32, F34) Copyright (c) 2005 by the European Economic Association.

Suggested Citation

  • Aart Kraay & Norman Loayza & Luis Servén & Jaume Ventura, 2005. "Country Portfolios," Journal of the European Economic Association, MIT Press, vol. 3(4), pages 914-945, June.
  • Handle: RePEc:tpr:jeurec:v:3:y:2005:i:4:p:914-945
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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