, investment in capital goods and a non-traded good. Such an environment is rich enough to explain several phenomena that are … inexplicable in more barren models. We suggest an explanation of why saving and investment may be correlated even with no … restrictions on trade in assets. We explain why a high saving country may nonetheless borrow from abroad to finance investment. We …

. This model generates dynamic relationships between foreign capital inflows, domestic investment and domestic bank debt in … accumulation of bank debt and increasing concentration of domestic lending and investment to the anticipation of contingent …