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This dissertation consists of three essays on international capital flows. The first chapter documents the accumulation of foreign exchange reserves and the simultaneous increase in the foreign direct investment (FDI) for emerging market economies. The second chapter discusses the performance of FDI firms and domestic firms in creating jobs using firm-level data from Orbis. The third chapter studies the proper exchange rate and monetary policy when emerging market economies denominate their external debt in foreign currencies. In Chapter 1, I study why emerging market economies hold high levels of foreign exchange reserves. I argue that foreign exchange reserves help emerging markets attract foreign direct investment. This incentive can play an important role when analyzing central banks' reserve accumulation. I study the interaction between foreign exchange reserves and foreign direct investment to explain the level of reserves using a small open economy model. The model puts the domestic entities and international investors in the same picture. The optimal level of the reserve-to-GDP ratio generated by the model is close to the level observed in East Asian economies. Additionally, the model generates positive co-movement between technology growth and the current account. This feature suggests that high technology growth corresponds to net capital outflow, because of the outflow of foreign exchange reserves in attracting the inflow of foreign direct investment, thus providing a rationale to the `allocation puzzle' in cross-economy comparisons. The model also generates positive co-movement between foreign exchange reserves and foreign debt, thus relating to the puzzle of why economies borrow and save simultaneously. In Chapter 2, joint work with Sakai Ando, we study whether FDI firms hire more employees than domestic firms for each dollar of assets. Using the Orbis database and its ownership structure information, we show that, in most economies, domestic firms tend to hire more employees per asset than FDI firms. The result remains robust across individual industries in the case study of the United Kingdom. The analysis shows that an ownership change itself (from domestic to foreign or vice versa) does not have an immediate impact on the employment per asset. This result suggests that different patterns of job creation seem to come from technological differences rather than from different ownership structures. In Chapter 3, I investigate how the devaluation of domestic currency imposes a contractionary effect on small open economies who have a significant amount of debt denominated in foreign currencies. Economists and policymakers express concern about the "Original Sin" situation in which most of the economies in the world cannot use their domestic currencies to borrow abroad. A devaluation will increase the foreign currency-denominated debt measured in the domestic currency, which will lead to contractions in the domestic economy. However, previous literature on currency denomination and exchange rate policy predicted limited or no contractionary effect of devaluation. In this paper, I present a new model to capture this contractionary devaluation effect with non-financial firms having foreign currency-denominated liabilities and domestic currency-denominated assets. When firms borrow from abroad and keep part of the asset in domestic cash or cash equivalents, the contractionary devaluation effect is exacerbated. The model can be used to discuss the performance of the economy in interest under exchange rate shocks and interest rate shocks. Future directions for empirically assessing the model and current literature are suggested. This assessment will thus provide policy guidance for economies with different levels of debt, especially foreign currency-denominated debt.

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Thesis (Ph. D.)--University of Kansas, 2002. / Includes bibliographical references (leaves 115-123).

This paper investigates the role of the global excess liquidity for macroeconomic variables, especially asset prices and external imbalance in China. We estimate structural VAR model and find evidence that the surge in global liquidity has limited effects on China's price level, output and asset prices. By inspecting the structural decomposition, we find that global output and inflation shocks affect domestic macroeconomic fluctuation. Using sign restrictions, we estimate the impacts of three structural shocks in driving the external imbalance and find that the global excess liquidity is a relevant factor while the shock to financial market may be a more important role in explaining the external imbalance than productivity shock. / Sun, Yun. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2012. / Includes bibliographical references (leaves 57-63). / Electronic reproduction. Hong Kong : Chinese University of Hong Kong, [2012] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Chapter 1. --- Introduction --- p.1 / Chapter 1.1. --- Introduction --- p.2 / Chapter 1.2. --- Theoretical background --- p.6 / Chapter 2. --- Data and methodology --- p.14 / Chapter 2.1. --- Data description --- p.14 / Chapter 2.2. --- Methodology --- p.16 / Chapter 3. --- Results and Interpretation --- p.21 / Chapter 3.1. --- Domestic SVAR results --- p.21 / Chapter 3.2. --- A global SVAR analysis for China --- p.35 / Chapter 4. --- Three structural shocks and global imbalance --- p.47 / Chapter 4.1. --- Sign restrictions analysis --- p.47 / Chapter 4.2. --- Empirical Evidence --- p.50 / Chapter 5. --- Conclusion --- p.54 / Chapter A. --- Data --- p.64

Thesis (doctoral)--Universiẗat Freiburg (Breisgau), 2005. / Includes bibliographical references (p. 213-242).

M.A. / The objective of this thesis was to discuss capital account liberalization and banking crises in emerging markets, against the backdrop of the Asian financial crisis in 1997. This was discussed with an underlying objective of evaluating the soundness of the South African banking system. The basis of this thesis was that a sound banking system coupled with good macroeconomic policies would make South Africa less vulnerable to global financial volatility. On the East Asian financial crisis, we found that the main cause of this crisis was the lack of prudent lending practices by most banking institutions. Lending practices were largely shaped by institutionalized corruption. Bad lending practices originated from connected lending as banks were owned and had strong links with big family conglomerates. These conglomerates were highly leveraged with very low profit margins and survived on cross-subsidization. As a result, they could not service their debts, resulting in large bad debts and non-performing loans in the banking systems. These non-performing loans and debt defaults had significant negative effects on banks' profitability and business survival, as they eroded earnings and shot up credit exposure. Furthermore, we also found that governments' political influence in the lending system and weak macroeconomic management (large current account deficits, fixed exchange rates and expansionary fiscal policies) contributed significantly to the East Asian financial fragility. Against this background, we recommend that emerging markets that want to liberalize their capital accounts should ensure that sound banking systems are properly entrenched. When financial systems are not strong, emerging countries would be exposed to imprudent credit risk assessments by banking institutions, resulting in nonperforming loans and collapse of those banking institutions. Secondly, our view is that emerging markets should pursue and adhere to the core banking principles of the Basel Committee on Banking Supervision. The objective of these principles is to ensure that banks operate profitably and have good business frameworks. The Basel Committee requires commercial banks to have solid and efficient supervision departments, with strong intentions of evaluating credit risks associated with loans and advances. Furthermore, central banks or any other custodians of banking institutions should have capital adequacy requirements in order to protect depositors and investors against any unforeseen liquidity pressures. From this thesis, we found that the South African banking system is sound. The low level of non-performing loans in the domestic banking system is indicative of prudent credit risk management. Even with prime interest rates at an all time high of 25% in late 1998, most banks managed to escape large non-performing loans, especially from the corporate sector. The brunt was mostly felt in the small business sector and household debt category. The South African Reserve Bank's Supervision Department sets out stringent guidelines with regard to the lending practices of banks. Banks are not allowed to overexpose themselves to particular clients, as was the case in East Asia. This also extends to deposits. Banks are not allowed to take deposits above 25% from a single source. The objective is to guard against liquidity pressures that could occur when that particular depositor withdraws the funding.

University of Macau / Faculty of Social Sciences. / Department of Economics

Wong Chi Leung. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2002. / Includes bibliographical references (leaves 98-99). / Abstracts in English and Chinese. / Abstract --- p.i / Acknowledgement --- p.iii / Table of Contents --- p.iv / Chapter Chapter 1. --- Introduction --- p.1 / Chapter Chapter 2. --- The Model --- p.6 / Chapter 2.1. --- Environment --- p.6 / Chapter 2.2. --- Autarkic equilibrium --- p.9 / Chapter 2.3. --- Equilibrium with unfettered international capital mobility --- p.14 / Figures of Chapter 2 --- p.20 / Chapter Chapter 3. --- Regarding Asymmetric Information Problem as a Subsidy --- p.23 / Chapter 3.1. --- Equilibrium without differential degree in asymmetric information --- p.23 / Chapter 3.2. --- Simulating asymmetric information by a subsidy --- p.26 / Figures of Chapter 3 --- p.29 / Chapter Chapter 4. --- Barrier as a Policy Instrument --- p.30 / Chapter 4.1. --- Introduction to barrier policy --- p.30 / Chapter 4.2. --- Fixing southern investment target --- p.32 / Chapter 4.3. --- Possibility of the stabilization policy to improve both countries' steady states --- p.36 / Chapter 4.4. --- Time-invarying barrier for attaining long-run target --- p.44 / Chapter 4.5. --- Inducing worldwide optimal path --- p.50 / Chapter 4.6. --- Precluding poverty trap --- p.56 / Figures of Chapter 4 --- p.59 / Chapter Chapter 5. --- Welfare --- p.66 / Chapter 5.1. --- Welfare effects at the agent level --- p.66 / Chapter 5.2. --- Welfare effects at the country level: introduction --- p.68 / Chapter 5.3. --- Next-period welfare effects at the country level: the South erects the policy --- p.70 / Chapter 5.4. --- Steady-state welfare effects at the country level: the South erects the policy --- p.73 / Chapter 5.5. --- Next-period welfare effects at the country level: the North erects the policy --- p.75 / Chapter 5.6. --- Steady-state welfare effects at the country level: the North erects the policy --- p.78 / Figures of Chapter 5 --- p.83 / Chapter Chapter 6. --- Epilogue --- p.84 / "Table of results: a comparison with Espinosa-Vega, Smith and Yip (2000)" --- p.87 / Appendix --- p.90 / Appendix A --- p.90 / Appendix B --- p.90 / Appendix C --- p.91 / Appendix D --- p.95 / References --- p.98

A research report submitted to the University of the Witwatersrand in partial fulfilment of the requirements for the degree of Master of Management in Finance and Investment. / This study examines Quantitative Easing policy programs of developed countries and their potential impact on Middle Income Countries through capital inflows. The study specifically focuses on the United States and European Union Quantitative Easing programs and investigates potential effects through the various transmission channels. An Autoregressive Multifactor MIDAS approach is used to carry out the empirical analysis and the study finds that lagged capital inflows are highly significant across the different models run and that there is evidence of transmission of quantitative easing to capital inflows to Middle Income Countries along the portfolio rebalancing and liquidity channels. / MT2017