This paper investigates the validity of the twin deficit hypothesis and the presence of the Feldstein-Horioka puzzle in the case of a small developing country, Vietnam. We examine the long run relationship and causality between current account balance, budget deficit and investment for the...

The EU has recently entered accession talks with five transition economies of eastern Europe. Membership in the EU would require inter alia the full liberalization of capital flows. This paper provides empirical evidence on the openness towards foreign capital that the accession states have...

Original sin is widely considered inevitable for emerging market economies on the ground that their currencies are not accepted as international currencies. Few, however, explore the effects of currency controls on original sin. To examine this possibility, I consider an open economy with a...

How do we know whether capital is more internationally mobile in some periods than in others or for some countries rather than others? Economists normally look at prices when examining market integration, but for capital markets it is difficult to test the law of one price with interest rates...

The paper investigates whether higher financial integration leads in general to slower current account adjustments. The study estimates theoretically founded trade balance reaction functions for a panel of seventy countries from 1970-2004. The empirical analysis finds that adjustment in...

This paper studies current account reversals in industrial countries across different exchange rate regimes. There are two major findings which have important implications for industrial economies with external imbalances: first, triggers of current account reversals differ between exchange rate...