Financial Development, International Capital Flows, and Aggregate Output

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dc.contributor.author Zhang, Haiping en
dc.coverage.spatial Tokyo, Japan en
dc.date.accessioned 2018-10-04T22:38:49Z en
dc.date.issued 2013-03-14 en
dc.identifier.uri http://hdl.handle.net/2292/38951 en
dc.description.abstract We 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 flows in the opposite direction; net capital flows go from poor to rich countries; despite its negative net international investment positions, the United States receives a positive net investment income. International capital mobility affects output in each country directly through the size of domestic investment and indirectly through the aggregate saving rate. Under certain conditions, the indirect effect may dominate the direct effect so that international capital mobility raises output in the poor country and globally, although net capital  flows are in the direction to the rich country. We also explore the welfare and distributional effects of international capital flows and show that the patterns of capital flows may reverse along the convergence process of a developing country. Our model adds to the understanding of the costs and the benefits of international capital mobility in the presence of domestic financial frictions. en
dc.relation.ispartof Macroeconomics Summer Research Seminar by Asian Development Bank Institute en
dc.rights Items in ResearchSpace are protected by copyright, with all rights reserved, unless otherwise indicated. Previously published items are made available in accordance with the copyright policy of the publisher. en
dc.rights.uri https://researchspace.auckland.ac.nz/docs/uoa-docs/rights.htm en
dc.title Financial Development, International Capital Flows, and Aggregate Output en
dc.type Conference Item en
dc.rights.holder Copyright: The author en
pubs.finish-date 2013-08-29 en
pubs.start-date 2013-08-29 en
dc.rights.accessrights http://purl.org/eprint/accessRights/RestrictedAccess en
pubs.subtype Conference Paper en
pubs.elements-id 707876 en
pubs.org-id Business and Economics en
pubs.org-id Economics en
pubs.record-created-at-source-date 2017-11-07 en


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