composition of capital flow a survey教程.pdfVIP

NBER WORKING PAPER SERIES COMPOSITION OF CAPITAL FLOWS: A SURVEY Koralai Kirabaeva Assaf Razin Working Paper 16492 /papers/w16492 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 October 2010 The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. © 2010 by Koralai Kirabaeva and Assaf Razin. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Composition of Capital Flows: A Survey Koralai Kirabaeva and Assaf Razin NBER Working Paper No. 16492 October 2010 JEL No. F3 ABSTRACT We survey several key mechanisms that explain the composition of international capital flows: foreign direct investment, foreign portfolio investment and debt flows (bank loans and bonds). In particular, we focus on the following market frictions: asymmetric information in capital markets and exposure to liquidity shocks. We show that the information asymmetry between foreign and domestic investors leads to inefficient investment allocation and borrowing in a country that finances its domestic investment through foreign debt or foreign equity. Exposure to liquidity shocks due to the mismatch of debt maturity may induce banking crises and cause sudden reversals of short-term capital flows. When there is asymmetric information between sellers and buyers in the capital market, the