@article{Cavallo:296079,
      recid = {296079},
      author = {Cavallo, Eduardo and Eichengreen, Barry J. and Panizza,  Ugo},
      title = {Can countries rely on foreign saving for investment and  economic development ?},
      address = {2018},
      number = {ARTICLE},
      abstract = {Contrary to widespread presumption, a surprisingly large  number of countries have been able to finance a significant  fraction of their investment for extended periods using  foreign finance. While many of these episodes are in  countries where official finance is important, we also  identify episodes where a substantial fraction of domestic  investment is financed by private capital inflows. Although  there is evidence of a positive growth effect of such  inflows in the short run, that positive impact dissipates  after 5 years and turns negative over longer horizons. Many  such episodes end abruptly, with compression of the current  account and sharp slowdowns in investment and growth.  Summing over the inflow (current account deficit) episode  and its aftermath, we find that growth is slower than when  countries rely on domestic savings. The implication is that  financing growth and investment out of foreign savings,  while not impossible, is risky and too often  counterproductive.},
      url = {http://repository.graduateinstitute.ch/record/296079},
      doi = {https://doi.org/10.1007/s10290-017-0301-5},
}