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Chung, Keunsuk
School of Business Administration
Research Interests
  • International Macroeconomics
  • Economic Growth
  • International Capital Flows

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Foreign capital inflows: direct investment, equity investment, and foreign debt

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Title
Foreign capital inflows: direct investment, equity investment, and foreign debt
Author
Chung, Keunsuk
Issue Date
2009-02
Publisher
Inderscience Publishers
Citation
International Journal of Economic Policy in Emerging Economies, v.2, no.1, pp.86 - 105
Abstract
We develop a two-country stochastic growth model with production, relative price and sovereign default risks. Domestic production and relative price volatilities cause more fluctuations in the agents' portfolio decisions than the volatility of Foreign Direct Investment (FDI) production does. Both the sovereign risk and separability of FDI capital affect the composition of foreign capital inflows in two directions. The direct effect induces substitution of FDI for more Foreign Portfolio Investment (FPI) and foreign borrowing, while the indirect effect encourages FDI due to the increase in FDI's marginal contribution to the foreign agent's welfare after default.
URI
https://scholarworks.unist.ac.kr/handle/201301/8445
URL
https://www.inderscienceonline.com/doi/abs/10.1504/IJEPEE.2009.022943
DOI
10.1504/IJEPEE.2009.022943
ISSN
1752-0460
Appears in Collections:
SBA_Journal Papers
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