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.

Small Town Downtown Revitalization: Applying the Main Street Approach to the towns of Perth and Carleton Place, Ontario

The downtown main street of small towns is traditionally the economic, cultural, and social heart of the community, thereby requiring particular attention from planners and researchers alike. Considering modern threats to main streets including suburban sprawl and "big box" development, revitalization strategies are essential to ensuring longevity and vitality of small towns’ cores, in terms of economy, built environment, heritage, and identity. The Main Street Approach was established to mitigate challenges by providing a revitalization tool-kit for small Canadian towns, focusing on organization, marketing and promotion, economic and commercial development, and design and physical improvements. To better understand existing municipal tools for downtown revitalization in Ontario, a comparative analysis of the towns of Carleton Place and Perth's policies was conducted using the four pillars of the Main Street Approach as benchmark for best practice, and recommendations for other small towns to better incorporate revitalization policies were suggested.