International Capital Flows and Monetary Policy Spillovers

This dissertation examines the drivers and implications of international capital flows. The overarching motivation is the observation that countries not at the centre of global financial markets are subject to considerable spillovers from centre countries, notably from their monetary policy. I present new empirical evidence on the determinants of the observed patterns of international capital flows and monetary policy spillovers, and study their effect on both financial markets and the real economy. In Chapter 2 I provide evidence on the determinants of a puzzling negative correlation observed between productivity growth and net capital inflows to developing and emerging market economies (EMEs) since 1980. By disaggregating net capital inflows into their gross components, I show that this negative correlation is explained by capital outflows related to purchases of very liquid assets from the fastest growing countries. My results suggest a desire for international portfolio diversification in liquid assets by fast growing countries is driving much of the original puzzle. In the reminder of my dissertation I pivot to study the foreign characteristics that drive international capital flows and monetary policy spillovers, with a particular focus on the role of unconventional monetary policy in the United States (U.S.). In Chapter 3 I show that a significant portion of the heterogeneity in EMEs' asset price adjustment following the quantitative easing operations by the Federal Reserve (the Fed) during 2008-2014 can be explained by the degree of bilateral capital market frictions between these countries and the U.S. This is true even after accounting for capital controls, exchange rate regimes, and domestic monetary policies. Chapter 4, co-authored with Michal Ksawery Popiel, studies unconventional monetary policy in a small open economy, looking specifically at the case of Canada since the global financial crisis. We quantify the effect Canadian unconventional monetary policy shocks had on the real economy, while carefully controlling for and quantifying spillovers from U.S. unconventional monetary policy. Our results indicate that the Bank of Canada's unconventional monetary policy increased Canadian output significantly from 2009-2010, but that spillovers from the Fed's policy were even more important for increasing Canadian output after 2008.

Remote Sensing of Vegetation Change Across a Latitudinal Gradient in the Canadian Arctic

Global air surface temperatures and precipitation have increased over the last several decades resulting in a trend of greening across the Circumpolar Arctic. The spatial variability of warming and the inherent effects on plant communities has not proven to be uniform or homogeneous on global or local scales. We can apply remote sensing vegetation indices such as the Normalized Difference Vegetation Index (NDVI) to map and monitor vegetation change (e.g., phenology, greening, percent cover, and biomass) over time. It is important to document how Arctic vegetation is changing, as it will have large implications related to global carbon and surface energy budgets. The research reported here examined vegetation greening across different spatial and temporal scales at two disparate Arctic sites: Apex River Watershed (ARW), Baffin Island, and Cape Bounty Arctic Watershed Observatory (CBAWO), Melville Island, NU. To characterize the vegetation in the ARW, high spatial resolution WorldView-2 data were processed to create a supervised land-cover classification and model percent vegetation cover (PVC) (a similar process had been completed in a previous study for the CBAWO). Meanwhile, NDVI data spanning the past 30 years were derived from intermediate resolution Landsat data at the two Arctic sites. The land-cover classifications at both sites were used to examine the Landsat NDVI time series by vegetation class. Climate variables (i.e., temperature, precipitation and growing season length (GSL) were examined to explore the potential relationships of NDVI to climate warming. PVC was successfully modeled using high resolution data in the ARW. PVC and plant communities appear to reside along a moisture and altitudinal gradient. The NDVI time series demonstrated an overall significant increase in greening at the CBAWO (High Arctic site), specifically in the dry and mesic vegetation type. However, similar overall greening was not observed for the ARW (Low Arctic site). The overall increase in NDVI at the CBAWO was attributed to a significant increase in July temperatures, precipitation and GSL.