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Sovereigns, Upstream Capital Flows, and Global Imbalances

Laura Alfaro (), Sebnem Kalemli-Ozcan () and Vadym Volosovych ()

No 17396, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We construct measures of net private and public capital flows for a large cross-section of developing countries considering both creditor and debtor side of the international debt transactions. Using these measures, we demonstrate that sovereign-to-sovereign transactions account for upstream capital flows and global imbalances. Specifically, we find that i) international net private capital flows (inflows minus outflows of private capital) are positively correlated with countries' productivity growth, ii) net sovereign debt flows (government borrowing minus reserves) are negatively correlated with growth only if net public debt is financed by another sovereign, iii) net public debt financed by private creditors is positively correlated with growth, iv) public savings are strongly positively correlated with growth, whereas correlation between private savings and growth is flat and statistically insignificant. These empirical facts contradict the conventional wisdom and constitute a challenge for the existing theories on upstream capital flows and global imbalances.

JEL-codes: F2 F41 O1 (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-opm
Note: IFM
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Published as Alfaro, Laura, Sebnem Kalemli-Ozcan, and Vadym Volosovych. "Sovereigns, Upstream Capital Flows and Global Imbalances." Journal of the European Economic Association (forthcoming). (Also NBER Working Paper 17396.)

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Related works:
Journal Article: SOVEREIGNS, UPSTREAM CAPITAL FLOWS, AND GLOBAL IMBALANCES (2014) Downloads
Working Paper: Sovereigns, Upstream Capital Flows, and Global Imbalances (2011) Downloads
Working Paper: Sovereigns, Upstream Capital Flows and Global Imbalances (2011) Downloads
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