Splitting up dark matter

Abstract

This paper offers a detailed analysis of an alternative measure of income flows from officials’ accounts denominated “dark matter.” We aim to extend this area of investigation by splitting dark matter into two main components denominated “equity” and “portfolio.” In this way, we can shed some light on the underlying fundamentals of income flows’ evolution for different countries. Once we obtain these components, we proceed to contrast these new measures against the actual data. Our main results are that this new perspective supports previous work, helps explain the income flows for countries from another point of view, and we offer a first approach for the determinants of the differences in income flows across countries.

Keywords: Dark Matter, Global Imbalances, Foreign Direct Investment, Flows of income.