The role of population and wealth in international capital flows

Seeks to analyze the role of population and wealth in determining capital movements between countries.

By applying the Clark‐Jokung 50 percent portfolio theorem, considers the specific case of a two country world where the cumulative conditional expected outcome on the asset in one country is greater than or equal to that in the other country.

Specifically, lower population and wealth ratios (poor/rich) increase net capital flows to the poor country.

So far most of the literature on cross‐border capital flows has generally neglected the role of population and underestimated the role of wealth. This study addresses the gaps left by these deficiencies.