F21 - International Investment; Long-Term Capital Movements

• The Countercyclical Capital Buffer and International Bank Lending: Evidence from Canada

  Staff Working Paper 2021-61 David Xiao Chen, Christian Friedrich

  We examine the impact of the CCyB on foreign lending activities of Canadian banks. We show that the announcement of a tightening in another country’s CCyB leads to a decrease in the growth rate of cross-border lending between Canadian banks and borrowers in that other country.

  Content Type(s): Staff research, Staff working papers Topic(s): Credit risk management, Financial institutions, Financial stability, Financial system regulation and policies, International topics JEL Code(s): E, E3, E32, F, F2, F21, F3, F32, G, G2, G21, G28

• Interest Rate Uncertainty as a Policy Tool

  Staff Working Paper 2020-13 Fabio Ghironi, Galip Kemal Ozhan

  We study a novel policy tool—interest rate uncertainty—that can be used to discourage inefficient capital inflows and to adjust the composition of external account between shortterm securities and foreign direct investment (FDI).

  Content Type(s): Staff research, Staff working papers Topic(s): International financial markets, Monetary policy and uncertainty, Monetary policy framework JEL Code(s): E, E3, E32, F, F2, F21, F3, F32, G, G1, G15

• The Size and Destination of China’s Portfolio Outflows

  Staff Discussion Paper 2018-11 Rose Cunningham, Eden Hatzvi, Kun Mo

  The size of China’s financial system raises the possibility that the liberalization of its capital account could have a large effect on the global financial system. This paper provides a counterfactual scenario analysis that estimates what the size and direction of China’s overseas portfolio investments would have been in 2015 if China had had no restrictions on these outflows.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Balance of payments and components, Econometric and statistical methods, International topics JEL Code(s): C, C2, C23, F, F2, F21, F3, F32, G, G1, G15

• Does Outward Foreign Investment Matter for Canadian Productivity? Evidence from Greenfield Investments

  Staff Working Paper 2018-31 Naveen Rai, Lena Suchanek, Maria Bernier

  This paper seeks to understand how outward foreign direct investment (FDI) affects the productivity of Canadian firms. We estimate the impact of outward greenfield investment on measures of firm-level productivity using FDI data from roughly 2,000 Canadian firms and more than 4,000 outward FDI projects over the 2003–14 period.

  Content Type(s): Staff research, Staff working papers Topic(s): Firm dynamics, Productivity JEL Code(s): D, D2, D24, F, F2, F21, F23

• Can the Canadian International Investment Position Stabilize a Slowing Economy?

  Staff Analytical Note 2017-14 Maxime Leboeuf, Chen Fan

  In this note, we find that valuation effects can act as an important stabilizer, strengthening Canada’s net external wealth when its economic outlook worsens relative to that of other countries.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Balance of payments and components, International financial markets JEL Code(s): F, F2, F21, F3, F32
• June 8, 2017

  Canada’s International Investment Position: Benefits and Potential Vulnerabilities

  Financial System Review - June 2017 Gabriel Bruneau, Maxime Leboeuf, Guillaume Nolin

  While greater global financial integration is beneficial, the authors discuss how foreign capital inflows can also facilitate the buildup of domestic vulnerabilities and potentially lead to destabilizing reversals. Canada’s current international investment position is typical of advanced economies and will likely continue to act as an economic stabilizer. However, the growth and composition of Canada’s international investment position warrant continued monitoring.

  Content Type(s): Publications, Financial System Review articles Topic(s): Balance of payments and components, Financial stability, International financial markets JEL Code(s): F, F2, F21, F3, F32, F34, F36, F4, F6

• Expropriation Risk and FDI in Developing Countries: Does Return of Capital Dominate Return on Capital?

  Staff Working Paper 2017-9 M. Akhtaruzzaman, Nathan Berg, Christopher Hajzler

  Previously reported effects of institutional quality and political risks on foreign direct investment (FDI) are mixed and, therefore, difficult to interpret. We present empirical evidence suggesting a relatively clear, statistically robust, and intuitive characterization.

  Content Type(s): Staff research, Staff working papers Topic(s): Development economics, International financial markets JEL Code(s): D, D2, D23, F, F2, F21, F23

• Government Corruption and Foreign Direct Investment Under the Threat of Expropriation

  Staff Working Paper 2016-13 Christopher Hajzler, Jonathan Rosborough

  Foreign investment is often constrained by two forms of political risk: expropriation and corruption. We examine the role of government corruption in foreign direct investment (FDI) when contracts are not fully transparent and investors face the threat of expropriation.

  Content Type(s): Staff research, Staff working papers Topic(s): Development economics, Economic models, International topics JEL Code(s): F, F2, F21, F23, F3, F34

• The Dynamics of Capital Flow Episodes

  Staff Working Paper 2016-9 Christian Friedrich, Pierre Guérin

  This paper proposes a novel methodology for identifying episodes of strong capital flows based on a regime-switching model. In comparison with the existing literature, a key advantage of our methodology is to estimate capital flow regimes without the need for context- and sample-specific assumptions.

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, International financial markets, International topics, Monetary policy and uncertainty JEL Code(s): F, F2, F21, F3, F32, G, G1, G11

• Why Do Canadian Firms Invest and Operate Abroad? Implications for Canadian Exports

  Staff Discussion Paper 2014-7 Martin Coiteux, Patrick Rizzetto, Lena Suchanek, Jane Voll

  Canadian foreign direct investment and sales of Canadian multinational firms’ operations abroad, particularly in the manufacturing industry and in the United States, have accelerated sharply over the past decade.

  Content Type(s): Staff research, Staff discussion papers Topic(s): International topics, Recent economic and financial developments JEL Code(s): F, F1, F10, F2, F21, F23, F4, F41