The long run relationship between current account balance (CAB) and capital account balance (KAB) and the repercussions of capital account convertibility (KAC) on growth process of a country is a much debated issue. In particular, in the aftermath of the Southeast Asian crisis, the limitation of...

The purpose of this paper is to explain the reluctance of developing countries to open up their capital market to foreigners, and the conditions inducing an emerging market economy to switch its policies. We consider an economy characterized initially by a one-sided openness to the capital...

This paper argues that the 40-year-old Feldstein-Horioka “puzzle” (i.e., in a regression of the domestic investment rate on the domestic saving rate, the estimated coefficient is significantly larger than expected in a world with high capital mobility) should have never been labeled as such....

In this paper we analyze the effects of asymmetric demographic shocks in a two-region framework with perfectly mobile capital. Regions may differ in their individual thriftiness or the generosity of their social security arrangements. We find that population aging in one region causes...

The current accounts data of industrial countries exhibits some strong patterns that are inconsistent with the intertemporal approach to the current account. This is the basic model that international economists have been using for more than two decades to think about current account issues....

The study examines the relationship between capital inflows and exchange rate for the Nigerian economy between the periods of 1986-2014. A monetary policy indicator such as M2GDP is also introduced in the model. Estimated results show that capital inflows granger cause exchange rate suggesting...

The current account in developed countries is highly persistent and volatile in comparison to output growth. The standard intertemporal current account model with rational expectations (RE) fails to account for the observed current account dynamics together with persistent changes in...

By modeling the current account balances (as a percentage of GDP) in a dynamic AR (1) Model, Taylor (2002) proposed to use speed of mean reversion of the dynamics of the current account as a tool for measurement of capital mobility and confirmed the stylized fact of U-Shape degree of capital...

Emerging market corporations have significantly increased their borrowing in international markets after the global financial crisis. We show that this expansion was led by large-denomination bond issuances (bonds with face values exceeding US$300 million, and often exceeding US$500 million)....

The current account in developed countries is highly persistent and volatile in comparison to their output growth. The standard intertemporal current account model with rational expectations (RE) fails to explain the observed current account and consumption dynamics. The RE model extended with...