A Solution to Two Paradoxes of International Capital Flows / Shang-Jin Wei, Jiandong Ju.

Format:

Book

Government document

Author/Creator:

Wei, Shang-Jin.

Contributor:

Ju, Jiandong.

National Bureau of Economic Research.

Series:

IMF Working Papers; Working Paper ; No. 2006/178

IMF Working Papers

Language:

English

Subjects (All):

Capital movements--Mathematical models.

Capital movements.

International finance.

Physical Description:

1 online resource (39 p.)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2006.

Language Note:

English

Summary:

International capital flows from rich to poor countries can be regarded as either too low (the Lucas paradox in a one-sector model) or too high (when compared with the logic of factor price equalization in a two-sector model). To resolve the paradoxes, we introduce a non-neoclassical model which features financial contracts and firm heterogeneity. In our model, free patterns of gross capital flow emerge as a function of the quality of the financial system and the level of protection for property rights(i.e., the risk of expropriation. A poor country with an inefficient financial system but a low expropriation risk may simultaneously experience an outflow of financial capital but an inflow of foreign direct investment (FDI), resulting in a small net flow.

Contents:

""Contents""; ""I. Introduction""; ""II. Paradoxes of International Capital Flows""; ""III. The Model""; ""IV. Aggregation and Equilibrium Conditions""; ""V. Comparative Statics""; ""VI. Free Trade and Capital Flows""; ""VII. Conclusions""; ""Appendix: Proofs""

Notes:

"July 2006."

Description based on print version record.

ISBN:

9786613824103

9781462309443

1462309445

9781452742069

1452742065

9781283511650

1283511657

9781451987973

1451987978

OCLC:

698585528