xBookUtils.terms['fn_17_1'] = "This type of borrowing strategy is named after the infamous swindler Charles Ponzi who engaged in a “pyramid” or “chain letter” operation of this type in Boston in 1919 and 1920, borrowing new money from an expanding base of creditors to pay off past debt.";
xBookUtils.terms['fn_17_2'] = "To get this result, we can take the basic equation for the change in external wealth, W0 = (1 + r*)W−1 + TB0, and apply it N times with repeated substitution to obtain wealth at the end of period N: ";
xBookUtils.terms['fn_17_3'] = "John Kitchen, 2007, “Sharecroppers or Shrewd Capitalists? Projections of the U.S. Current Account, International Income Flows, and Net International Debt,” Review of International Economics, 15(5), 1036–1061; Barry Bosworth, Susan M. Collins, and Gabriel Chodorow Reich, 2007, “Returns on FDI: Does the US Really Do Better?” Brookings Trade Forum, 177–210.";
xBookUtils.terms['fn_17_4'] = "William R. Cline, 2005, The United States as a Debtor Nation (Washington, D.C.: Institute for International Economics and Center for Global Development); Pierre-Olivier Gourinchas and Hélène Rey, 2007, “From World Banker to World Venture Capitalist: US External Adjustment and the Exorbitant Privilege,” in Richard Clarida, ed., G7 Current Account Imbalances: Sustainability and Adjustment (Chicago: University of Chicago Press).";
xBookUtils.terms['fn_17_5'] = "Ricardo Hausmann and Federico Sturzenegger, “‘Dark Matter’ Makes the US Deficit Disappear,” Financial Times, December 7, 2005.";
xBookUtils.terms['fn_17_6'] = "Christopher M. Meissner and Alan M. Taylor, 2008, “Losing Our Marbles in the New Century? The Great Rebalancing in Historical Perspective,” in Global Imbalances and the Evolving World Economy, J. S. Little, ed. (Boston: Federal Reserve Bank of Boston).";
xBookUtils.terms['fn_17_7'] = "Daniel Gros, “Discrepancies in US Accounts Hide Black Hole,” Financial Times, June 14, 2006.";
xBookUtils.terms['fn_17_8'] = "On the disruptions and costs caused by sudden stops, see Guillermo Calvo and Carmen M. Reinhart, 2000, “When Capital Inflows Suddenly Stop: Consequences and Policy Options,” in Reforming the International Monetary and Financial System, Peter B. Kenen and Alexander K. Swoboda, eds. (Washington, D.C.: International Monetary Fund), pp. 175–201; Pablo E. Guidotti, Federico Sturzenegger, and Agustín Villar, 2004, “On the Consequences of Sudden Stops,” Economía, 4(2), 171–214; Michael M. Hutchison and Ilan Noy, 2006, “Sudden Stops and the Mexican Wave: Currency Crises, Capital Flow Reversals and Output Loss in Emerging Markets,” Journal of Development Economics, 79(1), 225–248.";
xBookUtils.terms['fn_17_9'] = "M. Ayhan Kose, Eswar S. Prasad, and Marco E. Terrones, 2007, “How Does Financial Globalization Affect Risk Sharing? Patterns and Channels,” IZA Discussion Papers 2903, Institute for the Study of Labor (IZA).";
xBookUtils.terms['fn_17_10'] = "Joshua Aizenman and Jaewoo Lee, 2005, “International Reserves: Precautionary versus Mercantilist Views, Theory and Evidence,” NBER Working Paper No. 11366; Romain Ranciere and Olivier Jeanne, 2006, “The Optimal Level of International Reserves for Emerging Market Countries: Formulas and Applications,” IMF Working Paper No. 06/229; Ceyhun Bora Durdu, Enrique G. Mendoza, and Marco E. Terrones, 2007, “Precautionary Demand for Foreign Assets in Sudden Stop Economies: An Assessment of the New Mercantilism,” NBER Working Paper No. 13123.";
xBookUtils.terms['fn_17_11'] = "Data from http://www.swfinstitute.org/fund-rankings/. The Hong Kong Monetary Authority Investment Portfolio ($299 billion) is excluded in the list here as it is not separate from, but part of, the central bank.";
xBookUtils.terms['fn_17_12'] = "Martin Feldstein and Charles Horioka, 1980, “Domestic Saving and International Capital Flows,” Economic Journal, 90(358), 314–329.";
xBookUtils.terms['fn_17_13'] = "Author’s calculations based on International Monetary Fund, International Financial Statistics, with investment and saving measured as a share of GDP.";
xBookUtils.terms['fn_17_14'] = "This is called the Cobb-Douglas production function.";
xBookUtils.terms['fn_17_15'] = "Douglas Gollin, April 2002, “Getting Income Shares Right,” Journal of Political Economy, 110(2), 458–474.";
xBookUtils.terms['fn_17_16'] = "In 1985, levels of GDP per worker were $23,256 in Mexico and $48,164 in the United States (in 1996 international dollars), according to the reference source for such data, the Penn World Tables. By 1995 this gap had widened a little. The data in this example are based on Robert E. Hall and Charles I. Jones, 1999, “Why Do Some Countries Produce So Much More Output per Worker Than Others?” Quarterly Journal of Economics, 114(1), 83–116.";
xBookUtils.terms['fn_17_17'] = "First solve for the relative level of capital per worker in India: kIND/kUS = [qIND/qUS]1/θ = [0.086]3 = 0.000636. The relative MPK in India would then equal [qIND/qUS]/[kIND/kUS] = [qIND/qUS]1/θ = [0.086]/[0.086]3 = 1/[0.086]2 = 135.";
xBookUtils.terms['fn_17_18'] = "Robert E. Lucas, Jr., May 1990, “Why Doesn’t Capital Flow from Rich to Poor Countries?” American Economic Review, 80(2), 92–96. Lucas presented the India example with the assumption that capital’s share was 0.4 rather than one-third, and that India’s output per worker was one-fifteenth of the U.S. level. In that case, India’s MPK is “only” 58 times the U.S. level, an equally absurd conclusion.";
xBookUtils.terms['fn_17_19'] = "James R. Lothian, April 2006, “Institutions, Capital Flows and Financial Integration,” Journal of International Money and Finance, 25(3), 358–369; Laura Alfaro, Sebnem Kalemli-Ozcan, and Vadym Volosovych, 2008, “Why Doesn’t Capital Flow from Rich to Poor Countries? An Empirical Investigation,” Review of Economics and Statistics, 90(2), 347–368.";
xBookUtils.terms['fn_17_20'] = "Alan M. Taylor, 1998, “On the Costs of Inward-Looking Development: Price Distortions, Growth, and Divergence in Latin America,” Journal of Economic History, 58(1), 1–28; Jonathan Eaton and Samuel Kortum, 2001, “Trade in Capital Goods,” European Economic Review, 45(7), 1195–1235.";
xBookUtils.terms['fn_17_21'] = "Francesco Caselli and James Feyrer, 2007, “The Marginal Product of Capital,” Quarterly Journal of Economics, 122(2), 535–568.";
xBookUtils.terms['fn_17_22'] = "Raghuram G. Rajan and Arvind Subramanian, 2008, “Aid and Growth: What Does the Cross-Country Evidence Really Show?” Review of Economics and Statistics, 90(4), 643–665.";
xBookUtils.terms['fn_17_23'] = "Note that this financial transaction would balance in the financial account, as a pure asset trade, so no borrowing or lending is needed and the current account remains zero, as we have assumed.";
xBookUtils.terms['fn_17_24'] = "On trends in home bias since 2001 see Christopher B. Philips, Francis M. Kinniry, Jr., and Scott J. Donaldson, 2012, “The Role of Home Bias in Global Asset Allocation Decisions,” Vanguard Research. On the impact of multinationals see Fang Cai and Francis E. Warnock, 2006, “International Diversification at Home and Abroad,” NBER Working Paper No. 12220.";
xBookUtils.terms['fn_17_25'] = "M. Ayhan Kose, Eswar Prasad, Kenneth S. Rogoff, and Shang-Jin Wei, 2006, “Financial Globalization: A Reappraisal,” NBER Working Paper No. 12484.";