We propose a dynamic factor model with time-varying parameters and stochastic volatility to analyze the relationship between global factors and country-specific capital flow dynamics. Studying a global sample of 43 countries from 1994 until 2015, we show that global co-movement of macroeconomic,...

Appendix A provides details for the computation of our model's equilibrium paths, the construction of model national and international accounts, and the sensitivity of our main findings to alternative parameterizations of the model. We demonstrate that the main finding of our paper - namely,...

The rise in economic growth in some countries of Africa over past two decades, powered mainly by productivity boom, has been associated with large private capital inflows despite poor integration of the African countries with the world capital markets. While these countries lack access to world...

The conventional wisdom is that crises are largely due to swings in short-term capital (mainly bank loans in the case of East Asia). Hence economies that finance their current account deficits mainly via foreign direct investment (FDI) are seen as being less susceptible to a crisis. The spate of...

Capital inflows are important factor affecting macroeconomic performance, such as the real exchange rate, interest rates, output, and price level. However, the components of capital inflows are also important. Capital inflows in the forms of portfolio investment liabilities, foreign direct...

Using a newly developed dataset this paper examines the cyclicality of private capital inflows to low-income developing countries (LIDCs) over the period 1990-2012. The empirical analysis shows that capital inflows to LIDCs are procyclical, yet considerably less procyclical than flows to more...

Purpose - The purpose of this paper is to investigate the impact of foreign capital shifts on economic activities and asset prices in South Korea. Design/methodology/approach - The authors in this paper apply the Bayesian threshold vector autoregressive (TVAR) model to estimate the regimes of...

This paper reviews the experience of four ASEAN countries in dealing with an unprecedently strong influx of foreign capital in the late 1980s and early 1990s. While there was some increase in inflation associated with the inflows, it was relatively minor, and real exchange rates did not...

On average, foreign corporations save a third of their local profits in the host country. While this is recorded as "Retained Earnings Foreign Direct Investment" (REFDI), macroeconomics has so far overlooked its particularities. This paper explores the aggregate economic properties of REFDI. It...

We propose a multi-country dynamic general equilibrium model to quantify the implications of trade and FDI liberalizations for the surge of global trade and current account (CA) imbalances. We calibrate our model to replicate the evolution of bilateral trade and FDI flows across 5 major...