International Capital Flows and Development Financial Openness Matters

Does capital flow from rich to poor countries? We revisit the Lucas paradox and explore the role of capital account restrictions in shaping capital flows at various stages of economic development. We find that, when accounting for the degree of capital account openness, the prediction of the neoclas...

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Bibliographic Details
Main Author: Ricci, Luca
Other Authors: Tressel, Thierry, Reinhardt, Dennis B. S.
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2010
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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651 4 |a United States 
653 |a Income 
653 |a Current account 
653 |a Short-term Capital Movements 
653 |a Personal income 
653 |a Current Account Adjustment 
653 |a Financial Aspects of Economic Integration 
653 |a Balance of payments 
653 |a Long-term Capital Movements 
653 |a Exports and Imports 
653 |a Capital account 
653 |a International economics 
653 |a National accounts 
653 |a Personal Income, Wealth, and Their Distributions 
653 |a Capital flows 
653 |a Capital inflows 
653 |a Macroeconomics 
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520 |a Does capital flow from rich to poor countries? We revisit the Lucas paradox and explore the role of capital account restrictions in shaping capital flows at various stages of economic development. We find that, when accounting for the degree of capital account openness, the prediction of the neoclassical theory is confirmed: less developed countries tend to experience net capital inflows and more developed countries tend to experience net capital outflows, conditional of various countries’ characteristics. The findings are driven by foreign direct investment, portfolio equity investment, and to some extent by loans to the private sector