Financial Development, International Capital Flows, and Aggregate Output

• Main Authors: von Hagen, Jurgen, Zhang, Haiping
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2014
• Subjects: Capital account liberalization; Financial frictions; Interest-elastic saving; Economics; Finance
• Online Access: https://ink.library.smu.edu.sg/soe_research/1514; https://ink.library.smu.edu.sg/context/soe_research/article/2513/viewcontent/ZhangHP2013JDE_AFV1.pdf
• Institution: Singapore Management University

We develop a tractable two-country overlapping-generations model and show that cross-country differences in financial development can explain three recent empirical patterns of international capital flows: Financial capital flows from relatively poor to relatively rich countries, while foreign direc...