Patterns of Capital Flows to Emerging Markets: A Theoretical Perspective
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Summary:
This paper reviews some of the basic patterns of international capital flows to emerging markets in recent years, including the composition of capital flows, intraregional flow patterns, and the geographical distribution of the flows. A theoretical model that sheds new light on these observed patterns is developed. This model focuses on the cost of financing aspect of capital flows, and shows that the patterns of capital flows are influenced by the combined effects of financial market development and growth potential in the recipient countries. The theoretical predictions of the model are shown to be consistent with the stylized facts.
Series:
Working Paper No. 1997/013
Subject:
Balance of payments Capital flows Capital inflows Emerging and frontier financial markets Financial markets Foreign direct investment Portfolio investment
English
Publication Date:
January 1, 1997
ISBN/ISSN:
9781451924947/1018-5941
Stock No:
WPIEA0131997
Pages:
32
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