Financial Flows, Global Interest Rates, and Political Integration

Jun Nagayasu

No 75, DSSR Discussion Papers from Graduate School of Economics and Management, Tohoku University

Abstract: This paper empirically analyzes international financial flows between 2000 and 2016. Calculating a proxy for global interest rates using a factor model, we confirm that there are global elements in national real interest rates, particularly those of advanced countries. Consequently, interest rate differentials are insignificantly associated with financial flows in these countries. Instead, exchange rates and political integration have been more consistently influencing investors' decisions to form financial portfolios than interest rates.

Pages: 14 pages
Date: 2018-03
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http://hdl.handle.net/10097/00122393

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Journal Article: Financial flows, global interest rates, and political integration (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:toh:dssraa:75

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