The Analysis Model of Global Flow of Funds in Theory and Practice

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The Analysis Model of Global Flow of Funds in
Theory and Practice

• Nan Zhang
• Hiroshima Shudo University

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Contents

• A doubtful recycling in global flow of funds
• Model building
• Overseas flow of funds in China
• The conclusion of the analysis

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Source Flow of Funds Accounts of the United
States , March 2006
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Source World Bank. Global Development Finance
2005
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Overseas fund flow is increasing in China (100
million RMB)
Source The Peoples Bank of China Quarterly
Statistical Bulletin
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The survey of research literature

• H.Chenery M.Strout,1966 (Two-Gap model)
• Mundell-Fleming model, 1968
• K. Marwah L. R. Klein model,1983
• ????,1993(???????????)
• ??,2002(????????????)
• ???,2003(???????????)

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What is global flow of funds?

• ??(1993) pp.170-171
• national flow of funds ? global flow of
  funds
• international capital movements ? global
  flow of funds
• ??(2002) p39
• ????????????????????????????????????????????
  ???????????????????????????????????????
• ?(2005)p32
• ???????????????????????????????????????????????
  ??????????????????????????????????????????????????
  ???????????????????????

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The theoretical outline of analysis

• Savings-investment and current account balance
• The financial markets balance
• Net fund outflows

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Theoretical model
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Theoretical model
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The method of model building

• Identification Estimation
• Evaluation Prediction
• Three Stage Least Squares method 3SLS

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Data

• Flow of Funds Account, FOF
• Balance of Payments, BOP
• International Financial Statistics, IFS
• World Economic Outlook, WEC
• Bank for International Settlements, BIS
• (Quarterly Locational International Banking
  Statistics)
• (Semi-annual Consolidated International
  Banking
• Statistics)
• Global Development Finance, GDF
• The Institute of International Finance, IIF
• Treasury International Capital, TIC)

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Overseas flow of funds in China (100 million RMB)
Source The Peoples Bank of China Quarterly
Statistical Bulletin
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The characteristics of overseas fund flows in
China, 1992 2004 (100 million RMB)

• Balance of savings-investment 1,194
• Current-account 1,755
• Overseas capital inflow 4,645
• Domestic capital outflow 2,133
• Foreign reserve assets -3,779
• Capital flight - 478
• Net capital inflows 2,512 FER3,779 Capital
  flight478
• -1,745(continue to export capital per annum)

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A doubtful recycling in China

• The constitution of foreign reserve assets
  CA1755, FRA3779
• The matter of financial control system
• The risk of the fund flows

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Source http//www.ustreas.gov/tic/
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Source World Bank. Global Development Finance
2005
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The conclusion of the analysis

• Balance of savings-investment
• Current-account
• International capital inflows
• Net outflows from china
• Foreign reserve assets Capital flight
• The influence of the American factor

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• Thank You !
• To Comment or obtain a copy of full paper
• zhang_at_shudo-u.ac.jp