International Capital Flows and National Creditworthiness: Do the Fundamental Things Apply As Time Goes By?
IMF Working Papers, December 1, 1998
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- International Capital Flows and National Creditworthiness: Do the Fundamental Things Apply As Time Goes By?
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Bibliographic details
- Authors: Paul Cashin, C. John McDermott
- Published: December 1, 1998
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451977523.001
Overview
- Authors: Paul Cashin, C. John McDermott
- Publication date: December 1, 1998
- Paper focus: Examination of the optimality of international capital flows to a persistent net importer of capital, Australia, during its post-capital-controls period 1984-98.
- Core approach: Comparison of actual international capital flows with those predicted by the consumption-smoothing approach to the determination of the current account.
Main findings
- International capital flows were larger than optimal during the 1980s.
- In the 1990s, international capital flows were broadly consistent with those predicted by the consumption-smoothing approach to the determination of the current account.
- The paper discusses main implications arising from measures of optimal capital flows and compares them with implications from key concepts used in determining national creditworthiness.
Implications and analysis themes
- Consumption-smoothing model as a benchmark for the optimal current account and capital flows.
- Assessment of a debtor country (Australia) over a sustained post-capital-controls period.
- Consideration of structural breaks in assessing optimality of capital flows and current account behavior.
Subjects and keywords
- Subjects: Balance of payments, Consumption, Consumption distribution, Current account, Current account deficits, Current account imbalances, National accounts
- Keywords: Australia, cash flow, Consumption, Consumption distribution, consumption path, consumption purpose, consumption smoothing, consumption-smoothing component, consumption-smoothing model, Current account, current account datum, Current account deficits, Current account imbalances, current account path, current account position, current account reversal, debtor country, international capital flows, model of the current account, optimal current account, present discounted value, structural break, WP
IMF Working Paper by Paul Cashin and C. John McDermott; December 1, 1998; Working Paper No. 1998/172; DOI: https://doi.org/10.5089/9781451977523.001