Irfan Ahmed, PhD

INTERNATIONAL CAPITAL FLOWS ž   Purchases or sales of real and financial assets across international borders ž   A country with greater investment opportunities than savings can fill the savings gap by borrowing from abroad. ž   International capital flows allow countries to run trade imbalances. ž   International financial markets allocate savings to productive capital in different countries. ž   International financial markets are subject to the laws of at least two countries. ž   Capital flows usually represent portfolio investment or direct foreign investment. ž   The DFI positions inside and outside have risen substantially over time, indicating increasing globalization. ž   In particular, both DFI positions increased during periods of strong economic growth. ž   Capital Inflows ž   Purchases of domestic assets by foreign households and firms ž   Capital Outflows ž   Purchases of foreign assets by domestic households and f...