Gross capital flows and the balance-of-payments: a balance sheet perspective

Karsten Kohler

No PKWP2019, Working Papers from Post Keynesian Economics Society (PKES)

Abstract: Gross capital flows have gained increasing attention in empirical research over the last decade. Due to their effects on current accounts and financial stability, gross flows are highly relevant for key issues in macroeconomics, political economy, and public policy. However, the exact relationship between gross flows, net flows and current accounts is often poorly understood. These notes aim to clarify some basic features and implications of gross capital flows. Balance-of-payments and balance-sheet accounting is utilised to illustrate how different kinds of gross flows play out on domestic balance sheets and in the balance-of-payments. Organised around nine propositions, the notes clarify the relationship between gross flows, net flows, and trade flows; explain some interesting properties of pure financial flows; discuss issues related to exchange rates and currency unions; and clarify the nature of sudden stop crises.

Keywords: Gross capital flows; balance-of-payments; current account; imbalances; trilemma; TARGET2; sudden stop (search for similar items in EconPapers)
JEL-codes: F31 F32 F36 F41 (search for similar items in EconPapers)
Pages: 28
Date: 2020-10
New Economics Papers: this item is included in nep-acc and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://postkeynesian.net/media/working-papers/PKWP2019_QQtbngA.pdf First version, 2020 (application/pdf)

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:pke:wpaper:pkwp2019

Access Statistics for this paper

More papers in Working Papers from Post Keynesian Economics Society (PKES) Contact information at EDIRC.
Bibliographic data for series maintained by Jo Michell ().