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Full-Text Articles in Social and Behavioral Sciences
Financial Development, International Capital Flows, And Aggregate Output, Jurgen Von Hagen, Haiping Zhang
Financial Development, International Capital Flows, And Aggregate Output, Jurgen Von Hagen, Haiping Zhang
Research Collection School Of Economics
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 …
Financial Development, International Capital Flows, And Aggregate Output, Jürgen Von Hagen, Haiping Zhang
Financial Development, International Capital Flows, And Aggregate Output, Jürgen Von Hagen, Haiping Zhang
Research Collection School Of Economics
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 …
International Capital Flows And Aggregate Output, Jurgen Von Hagen, Haiping Zhang
International Capital Flows And Aggregate Output, Jurgen Von Hagen, Haiping Zhang
Research Collection School Of Economics
We develop a tractable multi-country overlapping-generations model and show that cross-country differences in financial development explain three recent empirical patterns of international capital flows. Domestic financial frictions in our model distort interest rates and aggregate output in the less financially developed countries. International capital flows help ameliorate the two distortions. International flows of financial capital and foreign direct investment affect aggregate output in each country directly through affecting the size of aggregate investment. In addition, they affect aggregate output indirectly through affecting the composition of aggregate investment and the size of aggregate savings. Under certain conditions, the indirect effects may …