International Capital Flows and National Creditworthiness: Do the Fundamental Things Apply As Time Goes By?

December 1, 1998

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Paul Cashin, and C. John McDermott International Capital Flows and National Creditworthiness: Do the Fundamental Things Apply As Time Goes By?, (USA: International Monetary Fund, 1998) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the optimality of international capital flows to a persistent net importer of capital, Australia, during its post-capital-controls period 1984-98. The results suggest that international capital flows were larger than optimal during the 1980s, but in the 1990s such flows have been broadly consistent with those predicted by the consumption-smoothing approach to the determination of the current account. The paper also discusses the main implications arising from measures of optimal capital flows, and compares them with the implications arising from the key concepts used in the determination of national creditworthiness.

Subject: 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

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1998/172
Stock No:

WPIEA1721998
ISBN:

9781451977523
ISSN:

1018-5941

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