A new Bank for International Settlements (BIS) working paper seeks to decompose global capital flows to identify supply-and-demand effects, uncovering what the authors call the “Anna Karenina principle” in the process.
Mary Amiti, Patrick McGuire and David Weinstein lay out a methodology that splits global capital flows into a “common” component plus supply-and-demand effects. Applying this to BIS banking statistics, they find, paraphrasing Russian writer Leo Tolstoy, that while “all healthy cr
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