EconPapers    
Economics at your fingertips  
 

The relationship between international trade and capital flow: A network perspective

Haoyuan Ding, Yuying Jin, Ziyuan Liu and Wenjing Xie

Journal of International Money and Finance, 2019, vol. 91, issue C, 1-11

Abstract: The relationship between international trade and capital flow has been extensively discussed. Using bilateral data from 2001 to 2016, we construct international trade and capital flow networks, defined as a weighted graph in which nodes are countries and edges represent trade and capital flow linkages. Centrality is employed as the main variable in this study to represent the importance of a country in the networks. To gain further insight into the network characteristics, we adopt a turning-parameter centrality to combine both the original degree and strength measurements within the weighted network. Moreover, we develop a new indicator called “partner quality centrality” to identify the quality of neighbors. Within the panel cointegration framework, we argue that a positive long-run equilibrium exists between the trade and capital flow networks as constructed. In addition, we employ a panel causality test to investigate the short-run dynamics, indicating that the international capital flow network has predictive power on the trade network from the short-run perspective but not vice versa.

Keywords: International trade; Capital flow; Complex networks; Long-run equilibrium; Short-run dynamics (search for similar items in EconPapers)
JEL-codes: F00 F14 F37 G15 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0261560618300585
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:91:y:2019:i:c:p:1-11

Access Statistics for this article

Journal of International Money and Finance is currently edited by J. R. Lothian

More articles in Journal of International Money and Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-06-29
Handle: RePEc:eee:jimfin:v:91:y:2019:i:c:p:1-11