by On VoxEU, Stefan Avdjiev, Robert McCauley, and Hyun Song Shin discuss how a focus on net capital flows between countries can mislead policy analysts if they neglect heterogeneity between sectors in a country and/or non-congruence of economic and currency area that is, if they assume the “triple coincidence” between economic area, decision-making unit, and currency area. The triple coincidence misleads because it obscures gross flows, … in that it gives insufficient weight to international funding currencies that are extensively borrowed outside the borders of their home countries … if it glosses over the relevant decision-making unit by aggregating too much.
Topics:
Dirk Niepelt considers the following as important: Capital flow, Currency area, Gross capital flow, International finance, Notes, Triple coincidence
This could be interesting, too:
Dirk Niepelt writes Does the US Administration Prohibit the Use of Reserves?
Dirk Niepelt writes “Report by the Parliamentary Investigation Committee on the Conduct of the Authorities in the Context of the Emergency Takeover of Credit Suisse”
Dirk Niepelt writes “Governments are bigger than ever. They are also more useless”
Dirk Niepelt writes The New Keynesian Model and Reality
On VoxEU, Stefan Avdjiev, Robert McCauley, and Hyun Song Shin discuss how a focus on net capital flows between countries can mislead policy analysts if they neglect heterogeneity between sectors in a country and/or non-congruence of economic and currency area that is, if they assume the “triple coincidence” between economic area, decision-making unit, and currency area.
The triple coincidence misleads
because it obscures gross flows, …
in that it gives insufficient weight to international funding currencies that are extensively borrowed outside the borders of their home countries …
if it glosses over the relevant decision-making unit by aggregating too much.