Savings Wedge, Productivity Growth, and International Capital Flows

Abstract

There are two stylized facts regarding the dynamics of international capital flows between countries, as illustrated in Figure 1. Fact 1: Net capital inflows fluctuate over time in both advanced and emerging economies. In Panel A, for advanced economies over the 1980-1986 period, capital inflows increase but decrease over the 1986-1997 period, and then increase continuously until they finally peak in 2006 at 1.8%. For emerging economies, net capital inflows also experience high fluctuation along their downward trend to a bottom of-4.2% in 2006, before climbing to 0%. Fact 2: Net capital inflows are highly (positively or negatively) correlated with productivity growth over time. In Panel B, for advanced economies over the 1986-1991 period, capital inflows decrease from 0.45% to 0% while the growth rate also declines from 0.28% to-0.6%. Over the 1992-2005 period, the expansion of capital inflows is accompanied by a surge of growth, except for a dip in growth in 2000. In Panel C, for emerging economies between 1986 and 1990, capital inflows decrease from 1.9% to 0.06% while the growth rate decelerates from 0.59% to-0.3%. Over the 1999-2006 period, however, the decline in capital inflows accompanies

Flow Correlations Within Time Intervals Of Variable Length: Spline Analysis

“…To find a more effective alternative to conventional econometric methods, the analysis is carried out based on new econometric methods. Basic requirements are provided for the methods and models of the proposed new research platform, which are necessary for a more efficient analytical, quantitative and graphical study of the flow correlation (Hakeem, 2020;Hung, 2020;Uz Akdogan, 2020). For this, a description of the dynamic characteristics of flows in the economy is given.…”