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5 edition of How does openness to capital flows affect growth? found in the catalog.

How does openness to capital flows affect growth?

Jordan Rappaport

How does openness to capital flows affect growth?

by Jordan Rappaport

  • 216 Want to read
  • 22 Currently reading

Published by Research Division, Federal Reserve Bank of Kansas City in Kansas City [Mo.] .
Written in English

    Subjects:
  • Capital movements -- Mathematical models,
  • Economic growth -- Mathematical models

  • Edition Notes

    StatementJordan Rappaport.
    SeriesRWP ;, 00-11, Research working paper (Federal Reserve Bank of Kansas City : Online) ;, 00-11.
    ContributionsFederal Reserve Bank of Kansas City. Research Division.
    Classifications
    LC ClassificationsHB1
    The Physical Object
    FormatElectronic resource
    ID Numbers
    Open LibraryOL3389186M
    LC Control Number2004615356

    This chapter begins by building on the national savings and investment identity, first introduced in The International Trade and Capital Flows chapter, to show how government borrowing affects firms’ physical capital investment levels and trade balances. A prolonged period of budget deficits may lead to lower economic growth, in part because. Trade and output in small open economies are more volatile than in larger economies. The study focuses on how country risk shocks and capital flow volatility affect growth of a small open economy under free trade and imperfect capital mobility. Main effects are in physical capital, in households' consumption and trade and : Raimondo Franco, A Osvaldo Jose.

    Third, we hypothesize that the effects of capital flows on economic growth depend on the level of development and the exchange rate regime. At first glance, the amount and composition of capital inflows would be expected to vary with the recipient country’s level of Size: KB. policy framework to manage volatile capital flows and their disruptive potential. This paper aims to identify factors that explain the size and volatility of various types of capital flows to developing Asia with regard to other emerging market economies. The estimates for a panel dataset show that per capita income growth, trade openness, andCited by:

    booms or increase in capital flows on the competiveness of the export-oriented sectors and import-competing sectors. The effect of Capital flows on the real exchange rate can be different depending upon the choice of the exchange rate system and the composition of capital flows (Combes, Kinda and Plane, ). Capital flows and emerging between institutional quality and the effect of capital account openness on growth. Using find evidence that the positive effects of capital account openness on growth are contingent on the absence of macroeconomic imbalances, but not on openness to trade.


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How does openness to capital flows affect growth? by Jordan Rappaport Download PDF EPUB FB2

Rather than higher growth, the main effect of openness to capital flows is higher current levels of consumption financed by large trade deficits. Keywords: General Aggregative Models, Economic Growth of Open Economies, One, Two, and Multi-Sector Growth in Models.

JEL Classification: E10, F43, O Suggested Citation: Suggested by: Rather than higher growth, the main effect of openness to capital flows is higher current levels of consumption financed by large trade deficits.

Do you want to read the rest of this article Author: Jordan Rappaport. CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): Willis. The views expressed herein are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of Kansas City or the Federal Reserve System.

Rappaport. Openness, Finance and Growth: Capital flows & Aid Darryl McLeod. Economic Growth & Development. Econ Spring • Capital Flows, financial openness and growth: Prasad Rajan Subramanian • Capital Flows and Growth JEL Survey Henry Capital controls: Lucas.

whether openness to foreign capital has signifi - cant growth benefi ts and whether, in the case of de- veloping countries, these benefi ts outweigh the risks.

capital account openness has a robust positive effect on TFP growth. The effect of de facto financial integration on TFP growth is less clear, but this masks an important and novel result.

We find strong evidence that FDI and portfolio equity liabilities boost TFP growth while external debt is actually negatively correlated with TFP growth. Financial Development, Financial Openness, and Economic Growth 5 GDP per Capita Growth and Financial Development Measures, with Total Capital Flows as Openness Indicator and Under a de Facto Foreign Exchange Regime after which it may even adversely affect growth.

The global financial crisis is consistent with such by: 6. The Growth Effects of Financial Openness and Exchange Rates more financially integrated into the international capital flows a country is. growth is more important than the effect on Author: Cesar M.

Rodriguez. Unobserved industry or country characteristics related to both capital inflows and growth could also bias the estimation and statistical inferences from traditional cross-country regressions.

Our identification strategy uses a panel-based fixed effects approach that studies a specific economic mechanism through which capital inflows affect Size: 1MB. Globalisation, Capital Flows and Balance of Payments. Let us first explain what is meant by globalisation.

Globalisation refers to the increased openness of an economy to the international trade, capital flows (both portfolio and foreign direct investment, FDI), transfer of technology and free movement of labour or people.

Rather than higher growth, the main effect of openness to capital flows is higher current levels of consumption financed by large trade deficits. Advanced search Economic literature: papers, articles, software, chapters, books. volatile growth, more flows have been associated with slower growth.

Volatility levels and changes reflect an interaction of domestic production and institutional structures with global factors. JEL classification: F Key words: Capital flows, growth, growth.

capital account openness in shaping capital flows across countries at different income levels. To provide an overview of our results, we find that the prediction of the standard model is not verified in the cross-section of countries during the s when many countries had capitalFile Size: 1MB.

This paper aims at uncovering the different channels through which de facto financial openness affects economic growth and its components.

The results herein indicate that de facto measures of financial openness (as proxied by different types of capital inflows) stimulate economic growth. In particular, the results indicate that higher levels of FDI inflows stimulate GDP per worker growth and. According to Bacchetta () it is likely that after financial liberalization, first, capital inflows will be observed.

Together with capital stock increase, domestic investments will be less and less charming as marginal productivity declines. This decline ends up with capital Size: KB. Economic theory has identified a number of channels through which openness to international financial flows could raise productivity growth.

However, while there is a vast empirical literature analyzing the impact of financial openness on output growth, far less attention has been paid to its effects on productivity growth. Influence mechanism analysis of trade openness and capital flows on China’s labor share Trade openness From the perspective of globalization, globalization process expands open degree, and improves the trade flows and specialization level between countries.

According to H-O model, trade makes the fields with competitive. Keywords: FDI, Capital formation, Trade openness, GDP growth, VECM and Bangladesh 1. Introduction Theoretically, the linkage between foreign direct investment (FDI), trade openness, capital formation, and economic growth tends to be positive.

A number of reasons can be outlined in favor of this assertion. First, the. It would like to open itself fully to capital flows in order to create a modern financial system, in which market forces play a bigger role.

Last summer it took some small steps towards that end. nDoes financial openness contribute to productivity growth. Yes. But in a subtle way. nDe jure capital account openness good for TFP growth nImpact of de facto financial integration on TFP growth depends on the form of capital flows nFDI and portfolio equity boost TFP growth; debt does not nWell-developed financial markets, good.

Capital flows refer to the movement of money for the purpose of investment, trade or business production, including the flow of capital within corporations in the form of investment capital.capital, while low growth countries receive significant amounts. That capital does not follow growth has been dubbed the allocation puzzle by Gourinchas and Jeanne ().

These seemingly perverse patterns of global financial flows are closely related to the important question about whether foreign capital plays a helpful, benign, or malign role in. Capital flows also are influenced by global and domestic factors whose relative importance tends to vary over time.

While capital flows provide significant benefits to investors and recipients, their sensitivity to economic conditions makes recipient countries vulnerable to .