America First? A US-centric view of global capital flows

Arbeitspapier

Both academic researchers and policymakers posit a unique role for the US in the inter-national financial system. This paper investigates the characteristics and determinants of US cross-border financial flows and examines how these contrast with those of the rest of the world. We analyse the relative importance of US, country-specific, and global variables as determinants of aggregate and bilateral US financial flows and as determinants of country-level cross-border financial flows excluding those directly involving the US. Our results indicate that variation in US variables - notably the VIX and US dollar exchange rate - has a quantitatively important influence on global financial flows, but mostly via US cross-border flows. Global and national risk indicators perform better in explaining "rest of the world" flows. Moreover, we find that the correlation between US and rest of the world flows peaks in periods of elevated uncertainty. We interpret our findings as evidence for the existence of a global financial cycle, only some of which is driven by policies and events in the US.

Object Details

• ISBN: 978-92-899-3500-5
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 2238

Classification and Topics

• Classification: Wirtschaft ; Economic Integration ; International Investment; Long-term Capital Movements ; Financial Aspects of Economic Integration ; International Policy Coordination and Transmission ; International Financial Markets
• Subject: International capital flows ; US financial system ; VIX ; US dollar exchange rate ; monetary policy spillovers

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): McQuade, Peter ; Schmitz, Martin
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2019

Further information

• DOI: doi:10.2866/017942
• Handle: http://hdl.handle.net/10419/208272
• Last update: 10.03.2025, 11:43 AM CET