Essays on host country effects of capital flows: Volatility and spillovers

The dissertation is composed of three essays concerned with the effects of international capital flows over host economies. The first investigates whether one of the main challenges to the conventional wisdom on capital flow volatility, based on the possibility of negative correlations between types of flows, is empirically relevant for the case of Foreign Direct Investment (FDI). Our analysis fails to prove a systematic presence of these interactions between flows. Instead, and in line with the predictions of the traditional literature on capital flows volatility, we show that a large share of FDI in total capital flows is a significant predictor of a stable financial account.; A second essay studies the link between international financial integration and macroeconomic volatility, by incorporating two elements---both the volatility and the type of flow---that have been relatively neglected in previous studies. We find that, while a large share of FDI tends to reduce macroeconomic volatility, this is true so long this flow remains stable. However, FDI volatility has a stronger association with growth volatility than other categories of capital flows, a result that we sustain on the closer link of this flow with productive activities of the host economy. In all, we provide a qualification of the conventional wisdom on capital flows volatility, which categorizes FDI as the most stable flow, and hence the most desirable for developmental purposes.; The final paper centers its attention on the ambiguous role of the protection of Intellectual Property Rights (IPR). IPR is seen as a tool to attract highly technological FDI. This however might impose costs to domestic firms of the reforming economy, since they could have fewer opportunities to enjoy spillover effects from foreign firms. Therefore, IPR seems an a priori unclear policy mechanism for technology upgrading. These claims are investigated through a study that uses Stochastic Frontier Analysis to estimate TFP growth. Our findings reveal that domestic and foreign firms respond to IPR strengthening in sharply opposed ways. These effects are more evident in technological sectors, which prior research has been identified as the most sensitive to IPR.