A flow of funds test of the capital inflow hypothesis

Article Abstract:

The stabilizing effect of induced net capital inflows on changes in nominal interest rates, without considering the source of exogenous shocks to credit markets, and the stabilizing effect of government borrowing induced net capital inflows are estimated to test the capital inflow hypothesis. Using a flow of funds model, the capital inflow hypothesis is supported with one exception: the case of an infinitely interest rate elastic supply of credit. The estimates made also imply that changes in nominal interest rates are significantly stabilized by net capital inflows.

Models, Interest rates, Capital investments, Capital movements, Budget deficits

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Inflation, human capital accumulation and long-run growth

Article Abstract:

A production function model developed by Wang and Yip theorizing that money is superneutral in relation to an economy's long-run economic growth rate was criticized. The superneutrality of money, however, will be negated when physical capital is a factor in human capital production because the growth rate will lessen the inflation rate. Parameterizations of the model, however, indicates that inflation will have slight effects on growth.

Economic aspects, Economic development, Inflation (Finance), Human capital, Inflation (Economics)

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