| Since the 1980 s,international capital flows have grown dramatically,and its internal development mechanism is worth studying.It is widely accepted by the economic scholars that the differences in returns and risks among various financial markets are the main driving factors affecting international capital flows.For emerging market countries,the introduction of foreign capital can make up for the shortage of domestic capital,promote economic development and scientific and technological progress;on the other hand,excessive foreign investment leads to diminishing investment benefits,especially the flow of large short-term funds can disturb the normal operation of the financial market,influence the exchange rate mechanism,and lead to a financial crisis.In practice,the common way to reduce the risk of foreign capital flow is to have the government of the capital inflow country provide the guarantee.In recent years,the European debt crisis and other serious crises have been triggered by sovereign debt defaults.Thus it is of great practical significance to study the impact of sovereign debt constraints on international capital flows.The research idea of this paper follows the applied economic analysis paradigm of theoretical basis,analysis framework,econometrics model,empirical analysis,and policy recommendations.First,it analyzes the mechanism of sovereign debt constraint on international capital flow,then it studies the international direct investment,international securities investment and foreign exchange market volatility,and uses the methods of literature study,normative analysis,and the combination of institutional and normative analysis to conduct the research on the impact of international direct investment,international securities investment and foreign exchange market volatility through empirical and econometric analysis,game theory analysis,etc.This paper focuses on the market effect of sovereign debt constraints on the international capital flows of various countries since the past century.With the three aspects of international direct investment,international securities investment and foreign exchange market fluctuations,the impact of sovereign debt constraints on international capital flows is analyzed by applying econometric empirical models.It is found that the relationship between sovereign debt and the inflow of international capital is inverted U-shaped,i.e.,the ratio of debt to GDP has a threshold effect: for low-debt countries and regions,the inflow of international capital has a positive impact,for high-debt counterparts,the positive effect will be significantly reduced,and even negative effects will be produced.Research shows that the risk control of sovereign debt is very important for both international investors and recipient countries.It requires management to allocate resources according to theprinciple of balancing risk and benefit,and make balanced decision based on risk management.This paper puts forward a sovereign debt risk assessment method based on international capital flows,constructs a global debt crisis early warning model with deep neural networks,and uses weight analysis method to obtain the main influencing factors for different types of countries.Finally,the conclusion is summarized with policy suggestions put forward in combination with China's "the Belt and Road Initiative".As the largest investor in developing countries,China opposes the "zero sum game",advocates win-win cooperation and promotes the building of a community of human destiny.For Chinese enterprises,international development has brought great opportunities and challenges.China's foreign investment needs to consider the sovereign debt situation of recipient countries,distinguish different types of recipient countries,pay close attention to the economic indicators such as international capital flow,inflation rate,term structure of foreign debt and GDP growth rate.In addition,the establishment of a global sovereign debt crisis early warning system will help to improve the ability of risk assessment and prediction,facilitate decision-making of foreign investment,and provide more effective financial support for the investment and industrial cooperation of countries along the B&R.The main innovations of the research in this paper are as follows:1)The theoretical framework for the impact of sovereign debt constraint on international capital flows is proposed.Based on the definition of the concepts of sovereign debt and international capital flows,this paper analyzes the causes of international capital flows and sovereign debt,and constructs an open country model to discuss the relationship between them,as well as the role of short-term foreign debt in causing or aggravating financial crises.For developing countries,the inflow of foreign capital can accelerate the process of capital accumulation and promote economic development;however,excessive capital inflow and accumulation of external debt cause capital output rate to fall and current account deficit,which will reverse the direction of capital flow and lead to a crisis.It can be seen that sovereign debt plays a positive role in promoting the inflow of international capital to a certain extent,but when the debt ratio is too high,it will aggravate the risk and lead to international capital flight,playing a reverse role.Based on the above theoretical analysis,this paper further expounds the mechanism of sovereign debt constraints on international direct investment,international securities investment and foreign exchange market volatility.The application scope of sovereign debt constraints is expanded to analyze the impact of sovereign debt constraints on international direct investment,international securities investment and foreignexchange market volatility.Few research has discussed the influence of sovereign debt constraints on international capital flows.Through data analysis,this paper illustrates the threshold effect of sovereign debt restraint,that is,when the level of foreign debt is below the threshold,the inflow of foreign capital has a positive effect on the economic development of host countries;when the level of foreign debt rises above the threshold,the positive effect is significantly reduced or even turns to negative.This paper also introduces the pressure index of foreign exchange market.With the advantage of continuous measurement,it proves that sovereign debt constraint is an important determinant of foreign exchange market volatility in the host country,thus directly affecting the flow of international capital through exchange rate fluctuations.2)Key indicators including international capital flow indicators are introduced to measure the risk of sovereign debt,and an early warning model using deep neural network is established to obtain the main influencing factors of sovereign debt default.This paper collects a large number of economic data of nearly 200 countries in the world for 46 years.According to the three principles of scientificity,comprehensiveness and operability,it puts forward the key indicators of sovereign debt risk based on international capital flows,constructs a calculation model using deep neural network and makes comparative analysis,which provides a basis for quickly and accurately determining the default risk of sovereign debt.Based on the above calculation model,the main factors affecting the outbreak of debt crisis are obtained for four different types of countries by using weight analysis method.These methods and models can quickly analyze dynamic data and provide guidance decisions.Combining "the Belt and Road Initiative" with the goal of "going out" of Chinese enterprises,it is of practical significance for transnational investment activities. |
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