Covid-19 and Capital Flows: The Responses of Investors to the Responses of Governments

Stefan Goldbach and Volker Nitsch

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: This paper examines the effect of national government response measures to Covid-19 on German international capital flows. Analyzing highly disaggregated monthly data from the German balance of payments statistics over the period from January 2019 through January 2021, we find that bilateral financial interactions are negatively affected by stricter containment and closure policies as well as health system policies of a partner country, while German capital flows benefit from a partner’s economic support policies. Moreover, to the extent that public interventions to fight the pandemic affect financial interactions, the adjustment mainly takes place along the intensive margin.

Date: 2021
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Published in Darmstadt Discussion Papers in Economics . 242 (2021)

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Related works:
Journal Article: Covid-19 and Capital Flows: The Responses of Investors to the Responses of Governments (2022)
Working Paper: Covid-19 and Capital Flows: The Responses of Investors to the Responses of Governments (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:dar:wpaper:129446

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