Official financial flows, capital mobility, and global imbalances
Tamim Bayoumi,
Joseph Gagnon and
Christian Saborowski
Journal of International Money and Finance, 2015, vol. 52, issue C, 146-174
Abstract:
We use a cross-country panel framework to analyze the effect of net official flows (chiefly foreign exchange intervention) on current accounts. We find that net official flows have a large but plausible effect on current account balances. The estimated effects are larger with instrumental variables (42 cents to the dollar on average compared to 24 without instruments), reflecting a possible downward bias in regressions without instruments owing to an endogenous response of net official flows to private financial flows. We consistently find larger impacts of net official flows when international capital flows are restricted and smaller impacts when capital is highly mobile. A further result is that there is an important positive effect of lagged net official flows (embodied in the lagged stock of official assets) on current accounts that we believe operates through the portfolio balance channel.1
Keywords: Current account balance; Foreign exchange intervention; Portfolio balance (search for similar items in EconPapers)
JEL-codes: F31 F32 F41 F42 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (36)
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Related works:
Working Paper: Official Financial Flows, Capital Mobility, and Global Imbalances (2014) 
Working Paper: Official Financial Flows, Capital Mobility, and Global Imbalances (2014) 
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:52:y:2015:i:c:p:146-174
DOI: 10.1016/j.jimonfin.2014.11.017
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