The demand for liquid assets, corporate saving, and international capital flows

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State: Public
Version: Author's accepted manuscript
Serval ID
serval:BIB_1337EFECE642
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
The demand for liquid assets, corporate saving, and international capital flows
Journal
Journal of the European Economic Association
Author(s)
Bacchetta  P., Benhima  K.
ISSN
1542-4766
Publication state
Published
Issued date
12/2015
Peer-reviewed
Oui
Volume
13
Number
6
Pages
1101-1135
Language
english
Abstract
The recent period of capital outflows from emerging economies has coincided with an increase in their corporate saving. In this paper, we model corporate saving as a demand for liquid assets by credit-constrained firms in a dynamic open-economy macroeconomic model. We find that the implications of this model are very different from standard models, because the demand for foreign bonds is a complement to domestic investment rather than a substitute. We show that this complementarity is at work when an emerging economy is on its convergence path or when it has a higher TFP growth rate. This framework is consistent with a number of stylized facts found in high-growth, high-investment emerging economies.
Keywords
Capital flows, global imbalances, working capital, credit constraints
Web of science
Open Access
Yes
Create date
06/01/2011 14:23
Last modification date
20/08/2019 12:41
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