Globalization and the Increasing Correlation between Capital Inflows and Outflows / J. Scott Davis, Eric van Wincoop.

Format:

Book

Author/Creator:

Davis, J. Scott.

Contributor:

National Bureau of Economic Research.

van Wincoop, Eric.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23671.

NBER working paper series no. w23671

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

We document that the correlation between capital inflows and outflows has increased substantially over time in a sample of 128 advanced and developing countries. We provide evidence that this is a result of an increase in financial globalization (stock of external assets and liabilities). This dominates the effect of an increase in trade globalization (exports plus imports), which reduces the correlation between capital inflows and outflows. In the context of a two-country model with 14 shocks we show that the theoretical impact of financial and trade globalization on the correlation between capital inflows and outflows is consistent with the data.

Notes:

Print version record

August 2017.