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International gross capital flows: New uses of balance of payments data and application to financial crises

Thorsten Janus () and Daniel Riera-Crichton ()

Journal of Policy Modeling, 2013, vol. 35, issue 1, 16-28

Abstract: Most studies of international financial openness and crises link economic performance to either the net inflow of capital or the gross inflow (outflow) defined as the change in foreign (domestic) holdings of domestic (foreign) assets over a period. In this paper we decompose the net inflow into four rather than two components. We show that the four-way decomposition provides a better understanding of six recent financial crises and predicts sudden stops better than a standard two-way decomposition. We conclude that four-way decompositions can be more informative than either the net capital inflow or two-way decompositions of the net inflow.

Keywords: Capital flows; Financial integration; External crises; Balance of payments crises (search for similar items in EconPapers)
JEL-codes: F21 F32 F36 G15 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1016/j.jpolmod.2012.09.003

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