This paper tests the significance of FDI as a way to alleviate credit constraints. Incoming foreign investment provides additional sources of capital. Specifically in the Chinese case, enterprises may look for foreign investors, being constrained in their activity due to distortions in the...

<heading format="display" id="h1" implicit="yes" level="1">Abstract</heading> We extend the literature on sharp reductions in current account deficits by taking into account not only short-term determinants, but also the deviation of net foreign assets from their long-run equilibrium level. First, we analyse the long-term relationship between net foreign assets...