We demonstrate that foreign institutional ownership (FIO) is associated with stronger stock return sensitivity to the Global Financial Cycle (GFC), indicating greater global co-movement among stocks selected by FIOs compared to those not selected. We conjecture that this may be because (i) FIOs...

This paper quantifies how demand and supply shocks transmit to yields in Colombia's sovereign bond market by estimating investor-level demand elasticities and translating them into equilibrium price effects. Using investor-security microdata and two complementary identification strategies, I...

We use a dynamic spatial general equilibrium model of international investment and production to investigate the real implications of the last five decades of financial globalization. We introduce a wedge accounting framework to estimate country- and time-varying measures of outward and inward...

This paper introduces the FinOpen index, a novel measure of capital flow management for 193 countries from 1996 to 2022. Using information from the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER), the index is constructed by estimating the level of openness...

Countries implement and liberalize capital controls opportunistically. To show this point, this paper introduces two novel indices—the Financial Account Restrictiveness Index (FARI) and the AREAER Change Index (ACI)—to measure and track capital flow restrictions across 190 countries...

The ruptured geopolitical world has accentuated the urgency for Europe to strengthen its economy through productivity-enhancing investment, including in new technologies and defence. The roadmap is laid out in the Draghi and Letta reports, but additional new aspects have been added because of US...

German government debt is considered a safe asset in times of turbulence. We estimate the impact of changes in the risk appetite of global investors on weekly investment fund flows into the German sovereign bond market. Our key contribution is to allow the impact of such shocks to depend on the...

This paper provides an evidence-based assessment of the EU supervisory landscape by combining a comprehensive mapping of supervisory models and authorities with an analysis of capital market players across key sectors, including market infrastructures, asset management, and crypto-asset service...

Domestic and foreign capital and consumption goods are imperfect substitutes in production and demand functions of the growth model by Bardhan-Lewis. We extend the model by introducing exogenous technical progress and allow for foreign debt dynamics without dropping domestic capital goods. Trade...

Inequality of wealth or liquid finance in a system with credit market imperfection adversely affects investment by poor investors. This is well known in the literature. In this paper we prove that the aggregate credit demand function would be relatively inelastic with unequal wealth distribution...

The study examines the degree of current account deficit (CAD) sustainability and capital mobility for a panel of 97 countries over the period 1980-2020. To this end, the study adopts a novel interpretation of the Feldstein-Horioka coefficient in the context of CAD sustainability and examines...

We propose a macroprudential theory of foreign reserve accumulation that can rationalize the secular trends in public and private international capital flows. In middle-income countries, the increase in international reserves has been associated with elevated private capital inflows, both in the...

Using a newly constructed dataset, this paper investigates the determinants of cross-regional venture capital (VC) flows within Europe through a structural gravity model. Using Poisson Pseudo Maximum Likelihood (PPML) estimations with high-dimensional fixed effects, we analyse how traditional...

Chinese private portfolio equity outflows, though small compared to other Chinese outflows, are growing rapidly because of capital account liberalization and capital flight. Using granular stock-holding data on Qualified Domestic Institutional Investor (QDII) mutual funds, we identify a nascent...

This paper examines how international investment agreements constrain the use and effectiveness of capital controls in emerging and developing economies. Leveraging a novel database on the specific content of investment treaties, I identify those that include "macro-stability exceptions", which...

In this paper, we analyze the effects of uncertainty shocks on portfolio flows in 25 emerging market and 21 advanced economies and shed light on socio-economic characteristics that may be relevant for the country-specific sensitivity towards the shocks. We derive uncertainty shocks from a proxy...

This study systematically explores the role of Cross-Border Capital Flows (CBCM) in the relationship between Economic Co-movement (ECM), and trade harmonization in Africa. Based on bilateral panel data from 2008 to 2022, the Prais-Winsten Regression, Panel Corrected Standard Error (PCSE) model...

The single currency was expected to make the balance of payments irrelevant between the euro-area member states. This benign view has been challenged by recent developments, especially as imbalances between euro-area central banks have widened within the TARGET2 settlement system....

This paper considers the impact of Central Bank Digital Currencies (CBDCs) on the world’s financial systems with a special emphasis on G20 economies. Using quarterly macro-financial data for the period of 2000 to 2024, collected from the IMF, BIS, World Bank, and Atlantic Council, a Global...

This paper investigates the role of capital controls in managing volatile capital flows by examining how developing countries (DCs) absorb this volatility. Using data from 44 DCs over the 2000-2019 period, we distinguish the extent to which countries offset inflow surges with outflows. We find...

This literature review connects trade and capital flows to (de)globalization, considering the main theoretical channels and empirical references to assess the current debate. The aim is to offer an integrated reference framework to study such a multifaceted global phenomenon. First, I...

Trade mis-invoicing represents a significant economic challenge in Ghana, with losses estimated at 3.03 per cent of gross domestic product in 2018. We examine the potential of a universal child benefit in Ghana through a counterfactual taxation of illicit financial flows. Using microsimulation,...

We analyze whether central bank credit lines and government-backed guarantees helped mitigate the impact of the pandemic's sudden stop, marked by the abrupt withdrawal of international capital, using administrative data on the universe of Chilean firms. Our regression discontinuity design...

US dollar appreciations can inflict sizable negative cross-border spillovers. We investigate such spillovers from flight-to-safety shocks and the accompanying "global dollar cycle". Results show that negative real sector spillovers from US dollar appreciations fall disproportionately on emerging...