Journal of Monetary Economics 2018 DOI: 10.1016/j.jmoneco.2018.07.009 View full text
J. Scott Davis, Eric Van Wincoop

Abstract: We document that the correlation between capital inflows and outflows has increased substantially over time in a sample of 128 advanced and developing countries. We provide evidence that this is a result of an increase in financial globalization (stock of external assets and liabilities). This dominates the effect of an increase in trade globalization (exports plus imports), which reduces the correlation between capital inflows and outflows. In the context of a twocountry model with 14 shocks we show that the …

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