Konferenzbeitrag

International Capital Flows, External Assets, and Output Volatility

This paper proposes a new perspective on international capital flows and countries' long-run external asset position. Cross-sectional evidence for 84 developing countries shows that over the last three decades countries that have had on average higher volatility of output growth: (1) accumulated higher external assets in the long-run and (2) experienced more procyclical capital outflows over the business cycle than those countries with a same growth rate but a more stable output path. We explain this finding with a stochastic real business cycle growth model in which higher uncertainty of expected income increases households' precautionary savings. In the model, the combination of income risk and the precautionary savings motive leads to procyclical capital outflows at business cycle frequency and a higher long-run external asset position.

Language
Englisch

Bibliographic citation
Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2014: Evidenzbasierte Wirtschaftspolitik - Session: International Finance ; No. D21-V3

Classification
Wirtschaft
Current Account Adjustment; Short-term Capital Movements
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
International Business Cycles

Event
Geistige Schöpfung
(who)
Krause, Michael
Hoffmann, Mathias
Tillmann, Peter
Event
Veröffentlichung
(who)
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
(where)
Kiel und Hamburg
(when)
2014

Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

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Object type

  • Konferenzbeitrag

Associated

  • Krause, Michael
  • Hoffmann, Mathias
  • Tillmann, Peter
  • ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft

Time of origin

  • 2014

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