International Capital Flows and U.S. Interest Rates

Francis Warnock and Veronica Warnock

The Institute for International Integration Studies Discussion Paper Series from IIIS

Abstract: Abstract: Foreign flows have an economically large and statistically significant impact on longterm interest rates. Controlling for various macroeconomic factors we estimate that had there been no foreign flows into U.S. bonds over the past year, the 10-year Treasury yield would currently be 150 basis points higher; even a step-down to average inflows would imply an increase of 105 basis points. The impact of the headline-making foreign official flows—a relatively small subset of total foreign accumulation of U.S. bonds—is also significant but markedly smaller. Our results are robust to a number of alternative specifications.

Keywords: bond yields; Japan; China (search for similar items in EconPapers)
JEL-codes: E43 E44 F21 (search for similar items in EconPapers)
Date: 2005-12-15
New Economics Papers: this item is included in nep-cna, nep-fmk and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Related works:
Working Paper: International Capital Flows and U.S. Interest Rates (2006)
Working Paper: International capital flows and U.S. interest rates (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:iis:dispap:iiisdp103

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