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Cash Sloshes around the world in unexpected ways

By February 20, 2020No Comments
The Economist Magazine | February 20, 2020

Economists are getting better at tracing cross-border capital flows

Money makes the world go round. But where in the world is it going? In theory the answer lies in statistics published by the likes of America’s Treasury Department and the International Monetary Fund (imf), which track cross-border flows of debt and equity investments. In practice creative corporate accounting mucks up the official figures. A growing body of research is trying to clean up the mess.

Accounting for corporate behaviour would be simple, if it could be organised neatly according to national boundaries. Petrobras, a Brazilian oil giant, would sell its bonds directly to American or European investors. In reality many companies raise funds through foreign subsidiaries set up for the purpose. Petrobras raises debt through its subsidiary Petrobras Global Finance bv, based in the Netherlands.


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