02128cas a2200253 a 4500 AALejournalIMF009446 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451867411 1018-5941 BD-DhAAL BD-DhAAL Punzi, Maria Teresa. Financing of Global Imbalances / Maria Teresa Punzi, W. Christopher Walker. Washington, D.C. : International Monetary Fund, 2007. 1 online resource (21 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper analyzes the determinants of bond flows, now the dominant source of capital inflows, into the United States, as a means of establishing conditions affecting the financing of the U.S. current account deficit. To test the hypothesis that capital flows have become more responsive to changes in relative interest rates and other conditions across borders, a panel data set, showing bond flows from 12 separate jurisdictions into the United States, is constructed for the period 1994-2006 using adjusted U.S. Treasury International Capital Flow (TIC) data. Panel vector autoregression and instrumental variables approaches are used to estimate the impact of changes in interest rate differentials and other fundamentals on capital flows into the U.S. The paper finds evidence for an impact from interest rate differentials to bond inflows that has increased over time. Under one plausible set of theoretical assumptions, the increased sensitivity can be interpreted as resulting from a reduction in home bias on the part of non-US investors. Mode of access: Internet Walker, W. Christopher. IMF Working Papers; Working Paper ; No. 2007/177 Full text available on IMF http://elibrary.imf.org/view/journals/001/2007/177/001.2007.issue-177-en.xml IMF e-Library