Capital Flows and the Current Account: Taking Financing (More) Seriously

Claudio Borio and Piti Disyatat

No 14, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: This paper questions the appropriateness of popular analytical frameworks that focus on current accounts or net capital flows as a basis for assessing the pattern of cross-border capital flows, the degree of financial integration and the vulnerability of countries to financial crises. In the process, it revisits the Lucas paradox, the Feldstein-Horioka puzzle and the notion of sudden stops. It argues that, in a world of huge and free capital flows, the centrality of current accounts in international finance, and hence in academic and policy debates, should be reconsidered.

Keywords: Capital flows; current account; global imbalances; financial integration; credit; finance; money (search for similar items in EconPapers)
JEL-codes: E10 E40 E44 E47 E52 E60 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2016-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Capital flows and the current account: Taking financing (more) seriously (2015)
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