The performance of a reserve requirement rule combined with foreign exchange intervention under the capital outflow shock is studied in a dynamic stochastic model of a small open economy. The model features a two-pillar toolkit of the monetary and macroprudential policies involving a hybrid...

This paper is a theoretical investigation of international lending andborrowing in the context of a general equilibrium model in which nationalproductivities are subject to random fluctuations and rates of timepreference differ among countries. International capital flows arise fromthe efforts...

Foreign portfolio investment is threatened by the risk of default and repudiation, while direct foreign investment is threatened by the risk of expropriation. These two contractual forms of investment can differ substantially in: (1) the amount of capital they can transfer from abroad to...

This paper examines whether IMF lending is associated with increases in outflows to offshore financial centers (OFCs), known for bank secrecy and asset protection, relative to other international destinations. Using quarterly data from the BIS on bilateral bank deposits, we are unable to detect...

A decade has passed since Robert Lucas asked why capital does not flow from rich to poor countries. Lucas used a contemporary example to illustrate his Paradox, the very modest flow of capital from the United States to India during the second great global capital market boom, after 1970. Had he...