INTERNATIONAL CAPITAL FLOWS: PRIVATE VERSUS PUBLIC FLOWS IN DEVELOPING AND DEVELOPED COUNTRIES

• 成果类型: Article
• 署名作者: Kim, Yun Jung; Zhang, Jing
• 署名单位: Sogang University; Federal Reserve System - USA; Federal Reserve Bank - Chicago
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12599
• 发表日期: 2023
• 页码: 225-260
• 关键词: business cycles; fiscal-policy; externalities; economies; GROWTH; DYNAMICS; prices; stops; GOODS; rich

摘要

Empirically, net capital inflows are procyclical in developed countries and countercyclical in developing countries. Private inflows are procyclical and public inflows are countercyclical in both groups of countries. The dominance of private (public) inflows in developed (developing) countries drives the difference in net inflows. We rationalize these patterns using a two-sector model of a small open economy facing borrowing constraints. Private agents overborrow because of the pecuniary externality arising from these constraints. The government saves to reduce aggregate debt, making the economy resilient to adverse shocks. Differences in borrowing constraints and shock processes across countries explain the empirical patterns of capital inflows.