The Demand for Liquid Assets, Corporate Saving, and Global Imbalances

In the recent decade, capital outows from emerging economies, in the form of a demandfor liquid assets, have played a key role in the context of global imbalances. In this paper,we model the demand for liquid assets by rms in a dynamic open-economy macroeconomicmodel. We nd that the implications of this model are very different from standard models,because the demand for foreign bonds is a complement to domestic investment rather than asubstitute. We show that this complementarity is at work when an emerging economy is on itsconvergence path or when it has a higher TFP growth rate. This framework is consistent withglobal imbalances and with a number of stylized facts such as high corporate saving rates inhigh-growth, high-investment, emerging countries.[...]