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Financial Flows, Global Interest Rates, and Political Integration

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  • Jun Nagayasu

Abstract

This paper empirically analyzes international financial flows between 2000 and 2016. Calculating a proxy for global interest rates using a factor model, we confirm that there are global elements in national real interest rates, particularly those of advanced countries. Consequently, interest rate differentials are insignificantly associated with financial flows in these countries. Instead, exchange rates and political integration have been more consistently influencing investors' decisions to form financial portfolios than interest rates.

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  • Jun Nagayasu, 2018. "Financial Flows, Global Interest Rates, and Political Integration," DSSR Discussion Papers 75, Graduate School of Economics and Management, Tohoku University.
    • Handle: RePEc:toh:dssraa:75
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    File URL: http://hdl.handle.net/10097/00122393
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    1. Ronald A. Ratti & Joaquin L. Vespignani, 2019. "What drives the global official/policy interest rate?," Applied Economics, Taylor & Francis Journals, vol. 51(47), pages 5185-5190, October.
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    1. Yan, Min & Gong, Xinshu, 2024. "Impact of green credit on green finance and corporate emissions reduction," Finance Research Letters, Elsevier, vol. 60(C).

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