| My dissertation consists of three chapters and studies the behavior of international capital flows and the desirability of capital controls.;The first chapter, "Financial Integration and the Correlation between International Debt and Equity Flows", documents a number of stylized facts of international debt and equity flows and investigates the roles of these two financial assets in international risk sharing. Using a new dataset, I find that these two flows have become increasingly volatile in the past decades and there is a negative correlation between these two flows. Using a simple two-country model, I show that negatively correlated debt and equity flows arise as two countries trade equity assets and bond to share income risks. In addition, the model can replicate the dynamics of the volatilities and correlation of debt and equity flows in the data as the financial integration progresses.;The second chapter, "Foreign Asset Accumulation among Emerging Market Economies: a Case for Coordination" (joint with Hao Jin), develops a core-periphery country framework with endogenous financial crises and studies foreign asset accumulation coordination among emerging market economies. Without coordination, the national planners of peripheral countries overlook the effect of their savings on the world interest rate and thus saves "too much" on the international financial market when insuring against financial crises. In contrast, a coordinator for all peripheral countries, who considers the effect of aggregate peripheral savings on the world interest rate, saves much less than the uncoordinated national planners and therefore results in a sizable welfare gain.;The third chapter, "Financial Crises and the Role of Debt Maturity for Emerging Economies", studies the role of debt maturity for small open economies in a two-sector DSGE model featuring collateral constraints and different bond durations. In the model, borrowing through a long-term bond is costlier for small open economies than a short-term bond. On the other hand, a long-term bond provides an insurance benefit against economic recessions and financial crises. These results shed some light on why emerging market economies adopt controls on short-term capital flows. |
