Working Paper: NBER ID: w19240
Authors: Pierre-Olivier Gourinchas; Hélène Rey
Abstract: We provide an overview of the recent developments of the literature on the determinants of long term capital flows, global imbalances and valuation effects. We present the main stylized facts of the new international financial landscape in which external balance sheets of countries have grown in size and discuss implications for the international monetary and financial system.
Keywords: global imbalances; valuation effects; long-term capital flows; external adjustment
JEL Codes: F21; F3; F33; F36; F4; F41; G01; G15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| differences in autarky interest rates (E43) | long-term capital flows (F32) |
| differences in autarky interest rates (E43) | capital inflows into the United States from emerging economies (F32) |
| fluctuations in asset prices and exchange rates (F31) | impact external balance sheets (F65) |
| valuation effects (Q51) | substantial capital gains and losses (H24) |
| valuation dynamics (D46) | overall external adjustment process (F32) |
| demographic factors and financial frictions (G59) | confound observed relationships (C90) |