What drives long-term capital flows? A theoretical and empirical investigation

What drives capital inflows in the long run? This paper illustrates how capital movements conform surprisingly well to the predictions of a neoclassical model with credit constraints. The most intriguing prediction of this class of models is that, contrary to a pure neoclassical model, domestic saving should act as a complement rather than a substitute to capital inflows. Nevertheless, this class of models keeps the neoclassical prediction that capital should flow to countries where it is most scarce. Using foreign debt data from 1970 to 1998, I find qualitative and quantitative evidence that supports these predictions.     

资本市场与国际收支:来自工业化国家的经验数据

本文从理论和经验上论证了资本市场与国际收支的关系。通过分析18个工业化国家的经验数据得出:一国如果拥有一个发达的资本市场,往往吸引较多的国外资金通过证券投资大量流入,引起资本账户顺差,与之同时往往伴随着经常账户逆差。这一结论的政策含义是:发达的资本市场是一国合理利用外资的一个重要前提;与之同时,发达的资本市场可能是一国国际收支平衡过程中实现自我调节的缓冲器。我国多年来一直保持资本账户巨额顺差,但主要是通过FDI实现的,这种格局的形成也与我国资本市场的缺陷有关。对我国而言,建设一个发达的资本市场对我国国际收支管理有着多方面的积极意义。     

资本流入对国内福利的影响

本文分析了在不完全竞争的产品市场中,在东道国的进口竞争性部门为资本密集型的情况下,外资流入对福利的效应问题。如果市场结构是外生的,那么资本流入会提高东道国的福利;然而,如果市场结构是内生的,由于资本流入导致新企业进入市场,从而提高了企业的平均成本,这样,资本流入反而会有贫困化效应。此外,本文还提出了一些新的观点,即研究了在考虑贸易中的一些限制性条件的情况下,资本流入对福利的效应。     

MARKET STRUCTURE,CAPITAL INFLOWS,AND HOME WELFARE

The welfare implications of foreign capital inflows in an economy with an imperfectly competitive product market and a capital-intensive import-competing sector are analyzed. If the market structure is exogenous with a fixed number of firms, then a capital inflow improves welfare of the host country. However, if the market structure is endogenous, then a capital inflow tends to be immiserizing because it increases entry and reduces per firm output, thus driving firms up their average cost schedule. In addition, the welfare implications of capital inflows in the presence of trade restrictions are also studied, generating some new insights.     

One cost of the Chilean capital controls: Increased financial constraints for smaller traded firms

There is growing support for taxes on short-term capital inflows in emerging markets, such as the encaje adopted by Chile from 1991 to 1998. This paper assesses whether the Chilean capital controls increased financial constraints for different-sized, publicly-traded firms. It uses an Euler-equation framework and shows that during the encaje, smaller traded firms experienced significant financial constraints. These constraints decreased as firm size increased. Both before and after the encaje, however, smaller firms did not experience significant financial constraints, and there is no relationship between firm size and financial constraints. Although Chilean-style capital controls may yield some benefits, any such benefits should be weighed against this cost of increasing financial constraints for small and mid-sized firms.     

Capital controls on inflows, exchange rate volatility and external vulnerability

We use high frequency data and a new econometric approach to evaluate the effectiveness of controls on capital inflows. We focus on Chile's experience during the 1990s, and investigate whether controls on capital inflows reduced Chile's vulnerability to external shocks. We recognize that changes in the controls will affect the way in which different macro variables relate to each other. In particular, we consider the case where controls co-exist with an exchange rate band aimed at managing the nominal exchange rate. We develop a methodology to deal explicitly with the interaction between these two policies. The main findings may be summarized as follows: (a) a tightening of capital controls on inflows depreciates the exchange rate and (b), we find that a tightening of capital controls increases the unconditional volatility of the exchange rate, but makes it less sensitive to external shocks.     

Capital-flow management measures: What are they good for?

Are capital controls and macroprudential measures related to international exposures successful in achieving their objectives? Assessing their effectiveness is complicated by selection bias; countries which change their capital-flow management measures (CFMs) often share specific characteristics and are responding to changes in variables that the CFMs are intended to influence. This paper addresses these challenges by using a propensity-score matching methodology. We also create a new database with detailed information on weekly changes in controls on capital inflows, capital outflows, and macroprudential measures related to international transactions from 2009 to 2011 for 60 countries. Results show that these macroprudential measures can significantly reduce some measures of financial fragility. Most CFMs do not significantly affect other key targets, however, such as exchange rates, capital flows, interest-rate differentials, inflation, equity indices, and different volatilities. One exception is that removing controls on capital outflows may reduce real exchange rate appreciation. Therefore, certain CFMs can be effective in accomplishing specific goals—but most popular measures are not “good for” accomplishing their stated aims.     

Compositional Effects of Capital Controls – Theory and Evidence

This paper examines the effects of capital controls on the composition of inter‐national capital flows, paying particular attention to debt inflows versus equity inflows. A two‐period small open economy model with stochastic second‐period output and asymmetric information between domestic agents and international financiers is utilised to generate predictions regarding the effects of capital controls on the relative use of debt versus equity for financing first‐period investment. These capital control implications are then investigated with quarterly frequency panel data for Latin America. Capital controls are found to significantly affect the composition of the capital account.     

Capital in British banking, 1920–1970

British banks have long attached great importance to capital. Currently they are subject to greater scrutiny and regulation on this issue than ever before. However, it was not until the disclosure of ‘hidden reserves’ in 1970 that a true picture of British banks' capital emerged. This article uses archival evidence to reveal the capital ratios of several major banks for much of the twentieth century, and demonstrates how these ratios were influenced by official restrictions. Overall the banks maintained much higher levels of capital than implied by their published accounts, although the impact of official restrictions was to force them to operate with lower capital ratios than they desired. But it is argued that capital ratios were neither achieved nor maintained at the expense of reduced or less risky lending.     

股票市场开放条件下的货币政策效应分析

本文探讨了在股票市场开放条件下,股票市场的国际资本流动对货币政策的影响。在开放经济条件下,对在东道国投资的国际投资者来说,如果股票投资比债券投资更重要,那么货币政策比财政政策相对有效的观点难以成立。扩张性货币政策使国内利率下降,但利率下降会增加股票投资的预期收益,这会吸引国际资本流入,从而导致本币升值,因而扩张性货币政策对产出的净影响是不确定的。浮动汇率体制有利于减缓外部冲击。     

A general equilibrium analysis of foreign investment and intersectoral linkage

In this paper, we demonstrate that a foreign capital induced growth in a protected sector, which provides an industrial input for agricultural products, may increase welfare even after the entire foreign capital income is repatriated. Such a policy may lead to an increase in the volume of trade along with an increase in the size of the protected sector, quite contrary to the usual perception. The analysed structure also incorporates migration and unemployment.     

Capital Inflows and the Real Exchange Rate: A Comparative Study of Asia and Latin America

The nexus of real exchange rate (RER) and capital inflows is examined through a comparative analysis of the experiences of emerging market economies in Asian and Latin America during the period 1985‐2000. It is found that the degree of appreciation in RER associated with capital inflow is uniformly much higher in Latin American countries compared to their Asian counterparts, despite the fact that the latter experienced far greater foreign capital inflows relative to the size of the economy. The econometric evidence suggests that both the composition of capital flows and differences in the degree of response of RER to capital flows matter in explaining these contrasting experiences. While RER appreciation is a phenomenon predominantly associated with other (non‐FDI) forms of capital inflows (OCFW), a given level of OCFW brings about a far greater degree of appreciation of the real exchange rate in Latin America where the importance of these flows in total capital inflow is also far greater. On the policy front, Asian countries seem to have used fiscal contraction and nominal exchange rate adjustment more effectively to cushion the RER against the appreciation pressure of capital inflows. There is, however, no evidence to suggest that sterilised intervention can generate a lasting impact on the real exchange rate.     

Growing up with capital flows

We examine the capital flows-domestic investment relationship for 60 developing countries from 1979 to 1999. In the 1990s, even as liberalization attracted new flows, foreign capital stimulated less domestic investment than in the preceding decade. With greater financial integration, governments accumulated more international reserves and domestic residents diversified by investing abroad. Foreign investors were also motivated by diversification objectives rather than by unmet investment needs. Inflows were channeled increasingly through portfolio flows—or through foreign direct investment (FDI) with the characteristics of portfolio capital—resulting in weak investment stimulus. However, stronger policy environments strengthened the link between inflows and investment.     

Optimal borrowing constraints and growth in a small open economy

Chinese high growth has been accompanied by government restrictions on international borrowing (capital controls). In this paper, we ask: are such restrictions a useful policy tool to facilitate growth? We provide a theory of borrowing constraints on households as a tool to correct a learning-by-doing externality. Borrowing constraints operate as a policy tool through two channels: (i) increasing labor supply and (ii) reallocating labor towards traded goods. We find that welfare gains are closest to that of the First-Best Planner allocation when the externality is not too large. We compute the sequence of optimal constraints along the growth path and show how the use of this policy tool contributes to repressed wages, current account balance, and slow real exchange rate appreciation.     

美国贸易政策不确定性与新兴经济体跨境股票资本流动北大核心CSSCI

本文使用1996年2月-2020年1月35个新兴经济体的跨境股票型基金微观数据,实证考察美国贸易政策不确定性对新兴经济体跨境股票资本流动的影响。结果表明:美国贸易政策不确定性上升会导致新兴经济体跨境股票型基金净资本流入下降,这一影响在2008年全球金融危机后更为显著。受国别因素影响,美国贸易政策不确定性的影响存在异质性。一国外汇风险暴露水平更高、国际金融一体化风险更大、与美国直接贸易联系更紧密,受到的美国贸易政策不确定性的影响更显著,更高的利率水平有利于缓解美国贸易政策不确定性的影响。从全球价值链视角来看,美国贸易政策不确定性上升对处于研发密集型行业下游和邮政通讯、金融商业服务等行业下游的经济体影响显著。渠道分析表明,全球投资者对新兴经济体的国别风险情绪变化是美国贸易政策不确定性冲击的重要传导渠道。进一步研究表明,中美贸易摩擦期间,主要受美国贸易政策不确定性影响,加征关税会显著降低新兴经济体跨境股票型基金净资本流入。在金融开放进程中,新兴经济体应防范外部不确定性引发的资本流动剧烈波动风险,保持宏观经济与金融市场稳定。     

Testing the human capital development model: the case of apprenticeships in Turkey

Human capital theory was developed to study how individual agents make rational choices or how they invest in human capital to maximize their welfare. One of the leading founders of this perspective, Becker, argues that schooling, on‐the‐job training, medical care, migration and searching for information about prices and incomes are different types of human capital as all these investments improve skills, knowledge or health, thereby increasing individual welfare. He states that education and training are the most important investments in human capital. Apprenticeship training is, thus, identified and treated as a type of investment in human capital. At first glance, it seems that apprentices who are being trained are acquiring skills in a specific vocation. One would suppose that the trainees are getting knowledge and skills and that they would become masters in their profession after a long training process. However, further enquiry is needed to see if this is the case in reality. The present small‐scale, exploratory study, based on 20 interviews – 10 with apprentices and 10 with their employers – aims to investigate the apprenticeship training system in Turkey. In doing so, it seeks to test the basic tenets of human capital theory against the facts discovered. The findings, if they could be generalized, suggest that the Turkish apprenticeship system is a form of child labour rather than a training process. Contrary to apprentice training being a human capital investment, the study finds that trainees do not rationally decide to enter an apprenticeship nor are they selected by a meritocratic system. All of them come from poor peasant families or low‐wage working families where the most pressing need is for the child to earn money.     

Goods and factors liberalization under increasing returns to scale

This paper develops a general equilibrium model with alternative forms of import restrictions, international capital mobility, and taxes on the rate of return on foreign capital in the context of a small open economy using an external increasing returns technology. Within this framework, this paper analyses the price and welfare effects of import liberalization in the presence of tax on foreign capital and of factor flows liberalization in the presence of alternative forms of import restrictions. It is shown, among other things, that, in contrast to the existing literature on constant returns to scale economy, the optimal policy towards foreign factors is possibly tax under each form of import restrictions.     

事业单位国有资产管理的制度设计、治理机制及其他

对事业单位国有资产管理进行改革已越来越迫切.作为规范性的事业单位的主体社会公益型组织,评价其资产管理工作的好坏不是以它们所创造的货币收益多少为指标,而必须研究设计出一整套多元的科学指标体系;应在医院、学校等事业单位建立理事会或董事会治理结构;重建成本核算的财务会计制度.     

Financial liberalization,openness and convergence

All industrialized nations relied on capital account controls for significant periods of their economic development and relaxations of capital account restrictions thought to be an integral aspect of economic development. Economists long advocated the removal of capital controls as a stabilizing factor of the development process to improve efficiency and return economies from distorted factor prices to production frontiers. Empirically, however, financial liberalizations have become associated with capital flow reversals, where initial capital inflows at the onset are subsequently offset by capital outflows resulting in higher levels of accumulated indebtedness. We investigate how capital flow reversals caused by financial liberalizations affect the speed of convergence of an economy. We show that financial liberalizations reduce short run convergence speeds, implying that open economies should experience significantly less output volatility but also longer transitions. The increased smoothness in response to initial shocks comes at a cost: as foreign borrowing rises to smooth domestic income fluctuations causing an increase in the domestic interest rate OECD data confirms our findings.     

Capital controls and the location of industry

This paper studies capital controls on the outflow of capital in a two-region new economic geography model. Capital controls are set in a non-cooperative or cooperative manner by social planners. Capital controls are relatively higher in the North in the non-cooperative equilibrium. This leads to relatively more firms located in the region where more consumers reside under the non-cooperative equilibrium. The locational bias towards the North in the non-cooperative equilibrium becomes larger as trade barriers are reduced. That is, firms locate to the North at a relatively higher rate in the non-cooperative equilibrium as trade is liberalised. Contrary to previous findings, it follows that global welfare is relatively higher in the non-cooperative equilibrium, although the social planner sets capital controls by maximising joint regional welfare in the cooperative equilibrium.