Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America
Lee Ohanian,
Paulina Restrepo-Echavarria and
Mark Wright
No 21744, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
Since 1950, the economies of East Asia grew rapidly but received little inter-national capital, while Latin America received considerable international capitaleven as their economies stagnated. The literature typically explains the failureof capital to flow to high growth regions as resulting from international capitalmarket imperfections. This paper proposes a broader thesis that country-specificdistortions, such as domestic labor and capital market distortions, also impactcapital flows. We develop a DSGE model of Asia, Latin America, and the Rest ofthe World that features an open-economy business cycle accounting framework tomeasure these domestic and international distortions, and to quantify their con-tributions to international capital flows. We find that domestic distortions havebeen the predominant drivers of international capital flows, and that the generalequilibrium effects of these distortions are very large. International capital market distortions also matter, but less.
JEL-codes: F21 F32 F41 F44 (search for similar items in EconPapers)
Date: 2015-11
New Economics Papers: this item is included in nep-dge, nep-lam, nep-opm and nep-sea
Note: EFG IFM
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Citations: View citations in EconPapers (17)
Published as Lee E. Ohanian & Paulina Restrepo-Echavarria & Mark L. J. Wright, 2018. "Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America," American Economic Review, vol 108(12), pages 3541-3582.
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Journal Article: Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America (2018)
Working Paper: Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America (2018)
Working Paper: Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America (2017)
Working Paper: Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America (2015)
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