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Capital Flows to Developing Countries: The Allocation Puzzle
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TLDR
This paper showed that the allocation of capital flows across developing countries is the opposite of this prediction: capital does not flow more to countries that invest and grow more, and the solution to the allocation puzzle lies at the nexus between growth, saving and international reserve accumulation.Abstract:
The textbook neoclassical growth model predicts that countries with faster productivity growth should invest more and attract more foreign capital. We show that the allocation of capital flows across developing countries is the opposite of this prediction: capital does not flow more to countries that invest and grow more. We call this puzzle the “allocation puzzle”. Using a wedge analysis, we find that the pattern of capital flows is driven by national saving: the allocation puzzle is a saving puzzle. Further disaggregation of capital flows reveals that the allocation puzzle is also related to the pattern of accumulation of international reserves. The solution to the “allocation puzzle”, thus, lies at the nexus between growth, saving, and international reserve accumulation. We conclude with a discussion of some possible avenues for research.read more
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Globalization and the Sustainability of Large Current Account Imbalances: Size Matters *
Joshua Aizenman,Yi Sun +1 more
TL;DR: In this article, the authors evaluate the sustainability of large current account imbalances in the era when the Chinese GDP growth rate and current account/GDP exceed 10% and investigate the size distribution and the durability of current account deficits during 1966-2005, and report the results of a simulation that relies on the adding-up property of global current account balances.
Journal ArticleDOI
A theory of rollover risk, sudden stops, and foreign reserves
Sewon Hur,Illenin O. Kondo +1 more
TL;DR: In this article, the authors show that a relatively small unanticipated increase in rollover risk jointly accounts for the outburst of sudden stops in the late 1990s, the increase in foreign reserves holdings, and the subsequent reduction of debt rollover crises in emerging economies.
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Is housing still the business cycle? Perhaps not
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Journal ArticleDOI
The impact of international financial integration on economic growth: New evidence on threshold effects☆
Jinzhao Chen,Thérèse Quang +1 more
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The Role of Trade Costs in the Surge of Trade Imbalances
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References
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Journal ArticleDOI
A Contribution to the Empirics of Economic Growth
TL;DR: The authors examined whether the Solow growth model is consistent with the international variation in the standard of living, and they showed that an augmented Solow model that includes accumulation of human as well as physical capital provides an excellent description of the cross-country data.
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Finance and Growth: Schumpeter Might Be Right
TL;DR: In this paper, the authors examined a cross-section of about 80 countries for the period 1960-89 and found that various measures of financial development are strongly associated with both current and later rates of economic growth.
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Why do Some Countries Produce So Much More Output Per Worker than Others
Robert E. Hall,Charles I. Jones +1 more
TL;DR: This article showed that the differences in capital accumulation, productivity, and therefore output per worker are driven by differences in institutions and government policies, which are referred to as social infrastructure and called social infrastructure as endogenous, determined historically by location and other factors captured by language.
Journal ArticleDOI
Domestic Saving and International Capital Flows
TL;DR: In this paper, the authors analyzed the international capital market and analyzed a wide range of issues including the nation's optimal rate of saving and the incidence of tax changes and found that saving that originates in a country remains 'to be invested there'.
Posted Content
Why doesn't capital flow from rich to poor countries?
TL;DR: In this paper, a rotary spinning ring is provided with upper and lower outwardly tapered body portions, each of which has its surface provided with inclined grooves, a ring holder for receiving the rotary body therein, a sliding flange positioned between the holder and the body and having some play therein, and dust caps mounted on the upper-and lower portions of the rotating body.