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A Mathematical Model of Foreign Capital Inflow

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  • Gopal K. Basak
  • Pranab Kumar Das
  • Allena Rohit

Abstract

The paper models foreign capital inflow from the developed to the developing countries in a stochastic dynamic programming (SDP) framework. Under some regularity conditions, the existence of the solutions to the SDP problem is proved and they are then obtained by numerical technique because of the non-linearity of the related functions. A number of comparative dynamic analyses explore the impact of parameters of the model on dynamic paths of capital inflow, interest rate in the international loan market and the exchange rate.

Suggested Citation

  • Gopal K. Basak & Pranab Kumar Das & Allena Rohit, 2016. "A Mathematical Model of Foreign Capital Inflow," Papers 1603.02438, arXiv.org, revised May 2017.
    • Handle: RePEc:arx:papers:1603.02438
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    References listed on IDEAS

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