Capital Flows Are Fickle
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Capital Flows Are Fickle
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Author : Mr.John C Bluedorn
language : en
Publisher: International Monetary Fund
Release Date : 2013-08-23
Capital Flows Are Fickle written by Mr.John C Bluedorn and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-08-23 with Business & Economics categories.
Has the unprecedented financial globalization of recent years changed the behavior of capital flows across countries? Using a newly constructed database of gross and net capital flows since 1980 for a sample of nearly 150 countries, this paper finds that private capital flows are typically volatile for all countries, advanced or emerging, across all points in time. This holds true across most types of flows, including bank, portfolio debt, and equity flows. Advanced economies enjoy a greater substitutability between types of inflows, and complementarity between gross inflows and outflows, than do emerging markets, which reduces the volatility of their total net inflows despite higher volatility of the components. Capital flows also exhibit low persistence, across all economies and across most types of flows. Inflows tend to rise temporarily when global financing conditions are relatively easy. These findings suggest that fickle capital flows are an unavoidable fact of life to which policymakers across all countries need to continue to manage and adapt.
International Capital Flows
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Author : Martin Feldstein
language : en
Publisher: University of Chicago Press
Release Date : 2007-12-01
International Capital Flows written by Martin Feldstein and has been published by University of Chicago Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007-12-01 with Business & Economics categories.
Recent changes in technology, along with the opening up of many regions previously closed to investment, have led to explosive growth in the international movement of capital. Flows from foreign direct investment and debt and equity financing can bring countries substantial gains by augmenting local savings and by improving technology and incentives. Investing companies acquire market access, lower cost inputs, and opportunities for profitable introductions of production methods in the countries where they invest. But, as was underscored recently by the economic and financial crises in several Asian countries, capital flows can also bring risks. Although there is no simple explanation of the currency crisis in Asia, it is clear that fixed exchange rates and chronic deficits increased the likelihood of a breakdown. Similarly, during the 1970s, the United States and other industrial countries loaned OPEC surpluses to borrowers in Latin America. But when the U.S. Federal Reserve raised interest rates to control soaring inflation, the result was a widespread debt moratorium in Latin America as many countries throughout the region struggled to pay the high interest on their foreign loans. International Capital Flows contains recent work by eminent scholars and practitioners on the experience of capital flows to Latin America, Asia, and eastern Europe. These papers discuss the role of banks, equity markets, and foreign direct investment in international capital flows, and the risks that investors and others face with these transactions. By focusing on capital flows' productivity and determinants, and the policy issues they raise, this collection is a valuable resource for economists, policymakers, and financial market participants.
Real Effects Of Capital Inflows In Emerging Markets
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Author : Ms.Deniz O Igan
language : en
Publisher: International Monetary Fund
Release Date : 2016-12-06
Real Effects Of Capital Inflows In Emerging Markets written by Ms.Deniz O Igan and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-12-06 with Business & Economics categories.
We examine the association between capital inflows and industry growth in a sample of 22 emerging market economies from 1998 to 2010. We expect more external finance dependent industries in countries that host more capital inflows to grow disproportionately faster. This is indeed the case in the pre-crisis period of 1998–2007, and is driven by debt, rather than equity, inflows. We also observe a reduction in output volatility but this association is more pronounced for equity, rather than debt, inflows. These relationships, however, break down during the crisis, hinting at the importance of an undisrupted global financial system for emerging markets to harness the growth benefits of capital inflows. In line with this observation, we also document that the inflows-growth nexus is stronger in countries with well-functioning banks.
Coincident Indicators Of Capital Flows
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Author : Yanliang Miao
language : en
Publisher: International Monetary Fund
Release Date : 2012-02-01
Coincident Indicators Of Capital Flows written by Yanliang Miao and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-02-01 with Business & Economics categories.
Capital flows data from Balance of Payments statistics often lag 3-6 months, which renders timely surveillance and policy deliberation difficult. To address the tension, we propose two coincident composite indicators for capital flows that improve upon existing proxies. We find that the most widely used proxy, the capital tracker, often overpredicts net flows by 30 percent. We augment the tracker into a composite indicator by assigning to it a lesser but optimally estimated weight while incorporating other regional and global coincident correlates of capital flows. The proposed composite indicator of net flows outperforms the capital tracker in its original format. To complement the indicator with an even timelier variant, we also utilize the EPFR high frequency coverage of gross bond and equity flows as an indicator on foreign investors' sentiment.
Financial Globalization And Inequality Capital Flows As A Two Edged Sword
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Author : Mr.Barry J. Eichengreen
language : en
Publisher: International Monetary Fund
Release Date : 2021-01-08
Financial Globalization And Inequality Capital Flows As A Two Edged Sword written by Mr.Barry J. Eichengreen and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-01-08 with Business & Economics categories.
We review the debate on the association of financial globalization with inequality. We show that the within-country distributional impact of capital account liberalization is context specific and that different types of flows have different distributional effects. Their overall impact depends on the composition of capital flows, their interaction, and on broader economic and institutional conditions. A comprehensive set of policies – macroeconomic, financial and labor- and product-market specific – is important for facilitating wider sharing of the benefits of financial globalization.
Surging Capital Flows To Emerging Asia
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Author : Mr.Ravi Balakrishnan
language : en
Publisher: International Monetary Fund
Release Date : 2012-05-01
Surging Capital Flows To Emerging Asia written by Mr.Ravi Balakrishnan and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-05-01 with Business & Economics categories.
Net capital flows to emerging Asia rebounded at a record pace following the global financial crisis, raising concerns about overheating and financial stability. This paper documents the size and composition of the most recent surge to Asian emerging markets from a historical perspective and compares developments in the broader economy, asset prices, and corporate variables across the different episodes of strong inflows. We find little evidence of a significant build-up of imbalances and resource misallocation during the most recent surge. We also review country experiences in managing the risks associated with inflows and argue that Asian countries have used regulatory measures during past surges, although there is not strong evidence of their efficacy without supporting monetary and fiscal policies.
Are Capital Flows Fickle Increasingly And Does The Answer Still Depend On Type
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Author : Barry Eichengreen
language : en
Publisher:
Release Date : 2017
Are Capital Flows Fickle Increasingly And Does The Answer Still Depend On Type written by Barry Eichengreen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with Capital market categories.
According to conventional wisdom, capital flows are fickle. Focusing on emerging markets, this paper asks whether this conventional wisdom still holds in the contemporary world. The results show that, despite recent structural and regulatory changes, much of it survives. FDI inflows are more stable than non-FDI inflows. Within non-FDI inflows, portfolio debt and bank-intermediated flows remain the most volatile. While FDI inflows are driven mainly by pull factors, portfolio debt and equity are driven mainly by push factors; and bank-intermediated flows are driven by a combination of push and pull factors. But capital outflows from emerging markets behave differently. FDI outflows from emerging markets have grown and become significantly more volatile. There is similarly an increase in the volatility of bank-intermediated capital outflows from emerging markets. The findings underscore that outflows from emerging markets, both FDI and bank-related flows, have come to play a growing role and warrant greater attention from analysts and policy makers.
The Drivers Of Capital Flows In Emerging Markets Post Global Financial Crisis
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Author : Swarnali Ahmed Hannan
language : en
Publisher: International Monetary Fund
Release Date : 2017-03-13
The Drivers Of Capital Flows In Emerging Markets Post Global Financial Crisis written by Swarnali Ahmed Hannan and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-03-13 with Business & Economics categories.
Using a sample of 34 emerging markets and developing economies over the period 2009Q3-2015Q4, the paper employs a panel framework to study the determinants of capital flows, both net and gross, across a wide range of instruments. The baseline regressions are then extended to focus on high and low episodes – quarters with flows one standard deviation above/below mean. Overall, the results suggest that the capital flow slowdown witnessed in recent years is due to a combination of lower growth prospects of recipient countries and worse global risk sentiment. However, the determinants of flows can be considerably different across instruments and across the type of flows considered, net or gross. The sensitivity of certain types of flows, towards push and pull factors, increases during periods of high and low capital flows. Moreover, some variables may not necessarily be significant during normal times, but can be important drivers during such episodes, and vice versa. Indicators like the gap between the U.S. long- and short-term maturity bond yields – not significant during normal times – can be an important driver during high episodes.
Volatile Capital Flows In Korea
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Author : K. Chung
language : en
Publisher: Springer
Release Date : 2014-12-17
Volatile Capital Flows In Korea written by K. Chung and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-12-17 with Business & Economics categories.
Volatility in Korean Capital Markets summarizes the Korean experience of volatile capital flows, analyzes the economic consequences, evaluates the policy measures adopted, and suggests new measures for the future.
Taming The Tide Of Capital Flows
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Author : Atish R. Ghosh
language : en
Publisher: MIT Press
Release Date : 2018-01-12
Taming The Tide Of Capital Flows written by Atish R. Ghosh and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-01-12 with Political Science categories.
A comprehensive examination of policy measures intended to help emerging markets contend with large and volatile capital flows. While always episodic in nature, capital flows to emerging market economies have been especially volatile since the global financial crisis. After peaking at $680 billion in 2007, flows to emerging markets turned negative at the onset of crisis in 2008, then rebounded only to recede again during the U.S. sovereign debt downgrade in 2011. Since then, flows have continued to swing wildly, leaving emerging market policy makers wondering whether they can put in place policies during the inflow phase that will soften the blow when flows subsequently recede. This book offers the first comprehensive treatment of policy measures intended to help emerging markets contend with large and volatile capital flows. The authors, all IMF experts, explain that, in the spirit of liberalization and deregulation in the 1980s and 1990s, many emerging market governments eliminated capital inflow controls along with outflow controls. By 2012, however, capital inflow controls were again acknowledged as legitimate policy tools. Focusing on the macroeconomic and financial-stability risks associated with capital flows, the authors combine theoretical and empirical analysis to consider the interaction between monetary, exchange rate, macroprudential, and capital control policies to mitigate these risks. They examine the effectiveness of various policy tools, discuss the practical considerations and multilateral implications of their use, and provide concrete policy advice for dealing with capital inflows.