Financial Development and the Patterns of International Capital Flows

Juergen von Hagen and Haiping Zhang ()

No 02-2010, Working Papers from Singapore Management University, School of Economics

Abstract: We develop a tractable two-country overlapping-generations model and show that cross-country differences in financial development can explain three recent empirical patterns of international capital fl ows: Financial capital fl ows from relatively poor to relatively rich countries while foreign direct investment flows in the opposite direction; net capital fl ows go from poor to rich countries; despite of its negative net international investment positions, the United States receives a positive net investment income. We also explore the welfare and distributional effects of international capital fl ows and show that the patterns of capital flows may reverse along the convergence process of a developing country.

Keywords: Capital account liberalization; financial development; foreign direct investment; symmetry breaking (search for similar items in EconPapers)
JEL-codes: E44 F41 (search for similar items in EconPapers)
Date: 2010-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in SMU Economics and Statistics Working Paper Series

Downloads: (external link)
https://mercury.smu.edu.sg/rsrchpubupload/17152/Zhang_FD.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Server closed connection without sending any data back

Related works:
Working Paper: Financial Development and the Patterns of International Capital Flows (2011)
Working Paper: Financial Development and the Patterns of International Capital Flows (2010)
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:siu:wpaper:02-2010

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Singapore Management University, School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by QL THor ().