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The Micro and Macro Dynamics of Capital Flows / Felipe Saffie, Liliana Varela, Kei-Mu Yi.
- Format:
- Book
- Author/Creator:
- Saffie, Felipe.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w27371.
- NBER working paper series no. w27371
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2020.
- Summary:
- We study empirically and theoretically the effects of international capital flows on resource allocation. Using the universe of firms in Hungary, we show that financial openness triggers input-cost and consumption channels, with the latter dominant and reallocating resources toward high expenditure elasticity activities in the short-run. A multi-sector heterogeneous firm trade model replicates these dynamics. In the long-run, the model predicts that resources will shift towards manufacturing exports to service debt. Owing to endogenous terms of trade dynamics, countries face a trade-off between the speed of convergence and their long-run capital stock; thus, financial openness can lead to welfare losses.
- Notes:
- Print version record
- June 2020.
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