World Scientific
Skip main navigation
Close Drawer MenuOpen Drawer Menu

Cookies Notification

We use cookies on this site to enhance your user experience. By continuing to browse the site, you consent to the use of our cookies. Learn More
×
Our website is made possible by displaying certain online content using javascript.
In order to view the full content, please disable your ad blocker or whitelist our website www.worldscientific.com.

System Upgrade on Mon, Jun 21st, 2021 at 1am (EDT)

During this period, the E-commerce and registration of new users may not be available for up to 6 hours.
For online purchase, please visit us again. Contact us at [email protected] for any enquiries.
No Access

The Drivers of Capital Flows in Emerging Markets Post Global Financial Crisis

    https://doi.org/10.1142/S1793993317500090Cited by:7
    Previous
    Next

    Abstract

    The paper studies the determinants of various instruments of capital flows, using 34 emerging markets and developing economies over 2009Q3–2015Q4. The regressions are extended to focus on quarters with flows that are one standard deviation above/below mean. Overall, the capital flow slowdown in recent years is due to lower growth prospects of recipient countries and worsening global risk sentiment. However, there are considerable differences across instruments. The sensitivity of some flows, towards push/pull factors, increases during periods of extreme capital flows. The gap between the US long- and short-term maturity bond yields — insignificant during normal times — is important during high capital flow episodes.

    JEL Classifications: F32, F36

    References

    • Ahmed, S and A Zlate [2014] Capital flows to emerging market economies: A brave new world?, Journal of International Money and Finance, 48, 221–248. Crossref, Google Scholar
    • Ahmed, S [2015]. If the Fed acts, How do you react? The liftoff effect on capital flows. IMF Working Paper No. 15/256, International Monetary Fund, Washington. Google Scholar
    • Broner, F, T Didier, A Erce and S Schmukler [2013] Gross capital flows: Dynamics and crises. Journal of Monetary Economics, 60, 113–133. Crossref, Google Scholar
    • Calvo, G [1998] Capital flows and capital-market crises: The simple economics of sudden stops. Journal of Applied Economics, 1, 35–54. Crossref, Google Scholar
    • Forbes, KJ and FE Warnock [2012] Capital flow waves: Surges, stops, flight, and retrenchment. Journal of International Economics, 88, 235–251. Crossref, Google Scholar
    • Ghosh, AR, MS Qureshi, J Kim and J Zalduendo [2014] Surges. Journal of International Economics, 92, 266–285. Crossref, Google Scholar
    • IMF [2011a]. International capital flows: Reliable or fickle? World Economic Outlook, International Monetary Fund. Google Scholar
    • IMF [2011b]. Recent experiences in managing capital inflows — Cross-cutting themes and possible policy framework. IMF Board Paper, International Monetary Fund. Google Scholar
    • IMF [2014]. Emerging market volatility: Lessons from the Taper Tantrum. IMF Staff Discussion Note, International Monetary Fund. Google Scholar
    • IMF [2016a]. Understanding the slowdown in capital flows in emerging markets. World Economic Outlook, International Monetary Fund. Google Scholar
    • IMF [2016b]. Capital Flows — Review of Experience with the Institutional View. IMF Board Paper, International Monetary Fund. Google Scholar
    • Koepke, R [2015] What drives capital flows to emerging markets? A survey of the empirical literature, Institute of International Finance. Google Scholar
    • Nier, E, TS Sedik and T Mondino [2014]. Gross private capital flows to emerging markets: Can the global financial cycle be tamed? IMF Working Paper No. 14/196, International Monetary Fund, Washington. Google Scholar
    • Pagliari, MS and SA Hannan [2017]. The volatility of capital flows in emerging markets: Measures and determinants. IMF Working Paper No. 17/41, International Monetary Fund, Washington. Google Scholar
    Published: 5 July 2017