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Covid-19 and Capital Flows: The Responses of Investors to the Responses of Governments

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  • Goldbach, Stefan
  • Nitsch, Volker

Abstract

This paper examines the effect of national government response measures to Covid-19 on German international capital flows. Analyzing highly disaggregated monthly data from the German balance of payments statistics over the period from January 2019 through January 2021, we find that bilateral financial interactions are negatively affected by stricter containment and closure policies as well as health system policies of a partner country, while German capital flows benefit from a partner’s economic support policies. Moreover, to the extent that public interventions to fight the pandemic affect financial interactions, the adjustment mainly takes place along the intensive margin.

Suggested Citation

  • Goldbach, Stefan & Nitsch, Volker, 2021. "Covid-19 and Capital Flows: The Responses of Investors to the Responses of Governments," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 129446, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    • Handle: RePEc:dar:wpaper:129446
    Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/129446/
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    Cited by:

    1. Chen, Hongyi & Tillmann, Peter, 2023. "Lockdown spillovers," Journal of International Money and Finance, Elsevier, vol. 137(C).
    2. Hongyi Chen & Peter Tillmann, 2022. "Lockdown Spillovers," MAGKS Papers on Economics 202215, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    3. Antoine Berthou & Sebastian Stumpner, 2022. "Trade Under Lockdown," Working papers 867, Banque de France.

    More about this item

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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