Download or read book Capital Flows and Economic Growth in the Era of Financial Integration and Crisis 1990 2010 written by Joshua Aizenman and published by . This book was released on 2011 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the relationship between economic growth and lagged international capital flows, disaggregated into FDI, portfolio investment, equity investment, and short-term debt. We follow about 100 countries during 1990-2010 when emerging markets became more integrated into the international financial system. We look at the relationship both before and after the global crisis. Our study reveals a complex and mixed picture. The relationship between growth and lagged capital flows depends on the type of flows, economic structure, and global growth patterns. We find a large and robust relationship between FDI - both inflows and outflows - and growth. The relationship between growth and equity flows is smaller and less stable. Finally, the relationship between growth and short-term debt is nil before the crisis, and negative during the crisis -- National Bureau of Economic Research web site.

Download or read book Capital Flows and Crises written by Barry J. Eichengreen and published by MIT Press (MA). This book was released on 2003-01 with total page 377 pages. Available in PDF, EPUB and Kindle. Book excerpt: An analysis of the connections between capital flows and financial crises as well as between capital flows and economic growth.

Download or read book Capital Flows Economic Growth and International Financial Integration written by 范姜群凌 and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book International Capital Flows and Development written by Mr.Thierry Tressel and published by International Monetary Fund. This book was released on 2010-10-01 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Does capital flow from rich to poor countries? We revisit the Lucas paradox and explore the role of capital account restrictions in shaping capital flows at various stages of economic development. We find that, when accounting for the degree of capital account openness, the prediction of the neoclassical theory is confirmed: less developed countries tend to experience net capital inflows and more developed countries tend to experience net capital outflows, conditional of various countries’ characteristics. The findings are driven by foreign direct investment, portfolio equity investment, and to some extent by loans to the private sector.

Download or read book Taming Capital Flows written by J. Stiglitz and published by Springer. This book was released on 2015-05-05 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume contains country experiences explained by policy makers and studies by leading experts on causes and consequences of capital flows as well as policies to control these flows. It addresses portfolio flow issues central to open economies, especially emerging markets.

Download or read book The Drivers of Capital Flows in Emerging Markets Post Global Financial Crisis written by Swarnali Ahmed Hannan and published by International Monetary Fund. This book was released on 2017-03-10 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Growth from International Capital Flows written by Antu Panini Murshid and published by International Monetary Fund. This book was released on 2011-04-01 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent commentary has downplayed the growth dividend from international financial integration, highlighting the possibly negative correlation between capital inflows and long-run growth. This paper presents new evidence consistent with standard economic theory and a more benign interpretation of cross-border private capital flows. The key observation is that a country’s growth volatility changes over time. With volatility below a threshold, an inflow of foreign capital has promoted growth. However, during periods of volatile growth, more flows have been associated with slower growth. Volatility levels and changes reflect an interaction of domestic production and institutional structures with global factors.

Download or read book Growing Up with Capital Flows written by Ashoka Mody and published by International Monetary Fund. This book was released on 2002-04 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a sample of 60 developing countries, we find evidence of a strong-almost one-to-one-relationship between capital inflows and domestic investment. However, this relationship has evolved over time. While growing financial integration with the rest of the world has increased access to foreign private capital, the relationship between foreign capital and domestic investment has weakened, reflecting changes in the composition of inflows, offsetting outflows, and increased foreign-currency reserve requirements. In contrast, better policies have not only brought in more capital but also, especially for foreign direct investment, have tended to strengthen the relationship between foreign capital and domestic investment.

Download or read book Foreign Capital and Economic Growth written by Eswar S. Prasad and published by . This book was released on 2007 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: We document the recent phenomenon of "uphill" flows of capital from nonindustrial to industrial countries and analyze whether this pattern of capital flows has hurt growth in nonindustrial economies that export capital. Surprisingly, we find that there is a positive correlation between current account balances and growth among nonindustrial countries, implying that a reduced reliance on foreign capital is associated with higher growth. This result is weaker when we use panel data rather than cross-sectional averages over long periods of time, but in no case do we find any evidence that an increase in foreign capital inflows directly boosts growth. What explains these results, which are contrary to the predictions of conventional theoretical models? We provide some evidence that even successful developing countries have limited absorptive capacity for foreign resources, either because their financial markets are underdeveloped, or because their economies are prone to overvaluation caused by rapid capital inflows.

Download or read book Foreign Capital and Economic Growth in the First Era of Globalization written by Michael D. Bordo and published by . This book was released on 2007 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: We explore the association between economic growth and participation in the international capital market. In standard growth regressions, we find mixed evidence of any association between economic growth and foreign capital inflows. If there is an impact, it comes with a long lag and it is transitory having no impact on either the steady state or the short run growth rate. This suggests a view that there were long gestation lags of large fixed investments and it is also consistent with a neoclassical growth model. We also argue for a negative indirect channel via financial crises. These followed on the heels of large inflows and sudden stops of capital inflows often erasing the equivalent of several years of growth. We then take a balance sheet perspective on crises and explore other determinants of debt crises and currency crises including the currency composition of debt, debt intolerance and the role of political institutions. We argue that the set of countries that gained the least from capital flows in terms of growth outcomes in this period were those that had currency crises, foreign currency exposure on their national balance sheets, poorly developed financial markets and presidential political systems. Countries with credible commitments and sound fiscal and financial policies avoided major financial crises and achieved higher per capita incomes by the end of the period despite the potential of facing sudden stops of capital inflows, major current account reversals and currency crises that accompanied international capital markets free of capital controls.

Download or read book International capital flows and their impact on the Turkish economy written by Ahmet Çimenoğlu and published by . This book was released on 2002 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The 1990s witnessed a significant surge in international capital flows. However, unlike in the previous episodes of high capital mobility , not only developed countries but also developing countries were subject to international capital flows. Especially in the first half of 1990s, there has been a significant increase in capital flows to developing countries. However in 1997, the wave of crises that started in Mexico in 1994 spread to the South East Asian countries that were pinpointed as success stories, to Russia in 1998, to Brazil in 1999, to Turkey in 2000, and to Turkey and Argentina in 2001. All of these countries have been severely hit by this recent wave of crises. The increase in the frequency of crises in developing countries raised concerns about their relationship to capital flows. The purpose of this study is to investigate the effects of international capital flows on developing country economies, paying specific attention to Turkey .In doing so, first a brief history of the international capital flows has been presented, then discussions about the determinants of capital flows have been reviewed. In fact, international capital flows were quite mobile at the end of the 19th century.However, these flows almost disappeared after the World War 1. Capital flows started to increase among developed countries in the 1970s. However, the surge in capital flows in developing countries only became significant in the 1990s. The wave of liberalisation of capital accounts should be seen as complementary to liberalisation and deregulation of foreign trade and financial sectors. Following the developed countries that put in effect liberalisation process in the 1970s, developing countries started to implement similar policies, mostly at the suggestion of international financial institutions and developed country goverments. Although there are some minor differences from country to country , the general outline of the liberalisation episodes of. developing countries were quite similar. This outline was basically prepared by elements of the so-called Washington Consensus, mainly in the last two decades. These elements are the International Monetary Fund (IMF), World Bank, World Trade Organisation (WTO), American economic bureaucracy, and private think-tank institutions mostly based in Washington. The proposed process of liberalisation and integrati9n with the world financial markets was submitted to the developing countries that expressed their willingness to accept liberalisation and integration. The crises that many countries have been subject to in the 1990s were mainly classified as currency and banking sector crises. For this reason, understanding what exactly currency crises are, which mechanisms produce them, whether it is possible to foresee them, and what their effects are on macroeconomic variables need to be examined carefully. Moreover, the observation that the currency crises usually come along with banking crises raised concerns about the relationpship between the two, and a substantial literature on this issue emerged. Another important discussion is about the choice of the exchange rate regime and whether this choice is influential in instigating a crisis. The literature on these issues is presented in the third chapter of this study .These discussions are quite relevant for Turkey which is on the brink of implementing a new exchange rate and monetary policy . The last chapter of this study is devoted to the analysis of Turkey's experience with international capital flows. Until the 1990s, Turkey was almost completely isolated from international capital flows. Liberalisation of capital account transactions in 1989 can be regarded as the continuation of the liberalisation process that started in 1980 with the liberalisation of foreign trade, followed by gradual deregulation of financial markets. Through the effective implementation of capital account liberalisation in 1990, there has been an increase in international capital movements in Turkey .When capital flows in the 1990s are analysed, there are two features that distinguish Turkey from her peers. The first is that the net capital flows to Turkey , when measured as the share of capital flows in Gross National Product (GNP), were lower than those flowing to comparable developing countries. The second is that the volatility of the flows was higher in Turkey than in other developing countries, meaning that Turkey could not enjoy sustained net capital inflows in the 1990s. Another issue that has been investigated in this study is the degree of success Turkey had in integrating into the global financial markets. For this investigation, two methods that have been widely employed have been adopted to Turkey .These methods are testing whether the uncovered interest parity (UIP) holds for Turkey , and whether savings and investments are correlated in Turkey .In the first test, the rationale is to test whether the yields on similar assets in domestic and foreign markets do approach each other, as the theory predicts. The results of this test for Turkey indicate that the domestic and foreign interest rates on similar assets do not converge. The second test that has been conducted for Turkey is to check whether savings and investments are correlated. The rationale behind this test is that capital has the ability of searching for the highest yield and investing there, given that capital can flow freely across borders. Hence, savings generated in a specific country can be directed to somewhere else in the world, if investment there offers a higher yield than the country of origin. In other words, investment at home does not necessarily have to be financed by savings at home. The theory predicts that, if a country is successfully integrated into the international financial system, then there should be no correlation between her savings and investments. The tests that have been run for Turkey to check for this relationship yielded somewhat confusing results. Moreover, the lack of data to resolve the endogeneity problems inherent in this test forces one to be cautious in interpreting the results obtained. The results obtained from annual and quarterly data differ as well. While with the annual data it is not possible to argue that savings and investments are not correlated at any time in Turkey , with quarterly data, it is possible to argue that a correlation,between the two disappears after 1990. Roughly summarising .the results of the tests, it can be argued that investments and savings in Turkey exhibited a much stronger correlation before 1990, but this correlation weakened afterwards, just as the theory would predict. To sum up, Turkey made the necessary legal and regulatory changes in order to liberalise her capital account in 1990. This apparently increased the volume of international capital transactions in the 1990s. However, it is difficult to argue that Turkey successfully managed to completely integrate her financial system with global financial markets. The main reasons behind this are macroeconomic instability , underdeveloped financial markets, and working 'in a regulatory and supervisory environment that was too weak to help enhance the efficiency of the system. The final part of this study is devoted to the analysis of the effects of international capital flows on the Turkish economy .In order to analyse these effects, a simple framework has been used in which the channels through which capital inflows are transmitted to the domestic economy are determined. Afterwards, the existence of these channels has been tested using econometric techniques. The findings suggest that a surge in capital inflows firstly increases private sector consumption expenditures and then private sector investments. However, the increase in investment is directed more heavily to non-tradable sectors. This finding has far reaching implications on the process that leads to crises in Turkey .Increased investments in non-tradable sectors do not contribute to the foreign exchange earning capacity of the country .In times of crises, this turns into a major problem as the country faces significant capital outflows and eventually goes into a crisis accompanied by large current account deficits. Given the above process, in this study it is argued that the existence of international capital flows exacerbates the crisis thatTurkey faces. However, it does not mean that it is the ''capital inflows'' themselves that create the crisis. In fact, it is the handling of the foreign capital flows that triggers the crisis. The Turkish financial system was not, and in fact is still not, developed enough to damp down the excessive volatility in international capital flows. Moreover, most of the capital inflows that were relied upon in financing current account deficits were of short-term nature. In other words, Turkey relied mainly on short-term capital inflows in financing her current account deficits, with a domestic financial system that was not large and sophisticated enough to handle the potential difficulties associated with sudden capital inflow reversals. Even more importantly , successive governments over the last decade ignored the fact that these capital inflows might not be sustainable, and went on expanding the public sector deficits all through 1990s. Hence, given the above vulnerabilities, crises were inevitable.

Download or read book Managing Capital Flows written by Masahiro Kawai and published by Edward Elgar Publishing. This book was released on 2010-01-01 with total page 465 pages. Available in PDF, EPUB and Kindle. Book excerpt: Managing Capital Flows provides analyses that can help policymakers develop a framework for managing capital flows that is consistent with prudent macroeconomic and financial sector stability. While capital inflows can provide emerging market economies with invaluable benefits in pursuing economic development and growth, they can also pose serious policy challenges for macroeconomic management and financial sector supervision. The expert contributors cover a wide range of issues related to managing capital flows and analyze the experience of emerging Asian economies in dealing with surges in capital inflows. They also discuss possible policy measures to manage capital flows while remaining consistent with the goals of macroeconomic and financial sector stability. Building on this analysis, the book presents options for workable national policies and regional policy cooperation, particularly in exchange rate management. Containing chapters that bring in international experiences relevant to Asia and other emerging market economies, this insightful book will appeal to policymakers in governments and financial institutions, as well as public and private finance experts. It will also be of great interest to advanced students and academic researchers in finance.

Download or read book Growing Up with Capital Flows written by Ashoka Mody and published by . This book was released on 2006 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a sample of 60 developing countries, we find evidence of a strong almost one-to-one relationship between capital inflows and domestic investment. However, this relationship has evolved over time. While growing financial integration with the rest of the world has increased access to foreign private capital, the relationship between foreign capital and domestic investment has weakened, reflecting changes in the composition of inflows, offsetting outflows, and increased foreign-currency reserve requirements. In contrast, better policies have not only brought in more capital but also, especially for foreign direct investment, have tended to strengthen the relationship between foreign capital and domestic investment.

Download or read book Foreign Capital and Economic Growth in the First Era of Globalization written by Michael D. Bordo and published by . This book was released on 2010 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: We explore the association between income and international capital flows between 1880 and 1913. Capital inflows are associated with higher incomes per capita in the long-run, but capital flows also brought income volatility via financial crises. Crises also decreased growth rates of income per capita significantly below trend for at least two years leading to important short term output losses. Countries just barely made up for these losses over time, so that there is no conditional long-run income loss or gain for countries that experienced crises. This is in contrast to the recent wave of globalization when capital importing countries that experienced a crisis seemed to grow relatively faster over fixed periods of time. We discuss some possibilities that can explain this finding.

Download or read book Global Waves of Debt written by M. Ayhan Kose and published by World Bank Publications. This book was released on 2021-03-03 with total page 403 pages. Available in PDF, EPUB and Kindle. Book excerpt: The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.

Download or read book Financial Crises Explanations Types and Implications written by Mr.Stijn Claessens and published by International Monetary Fund. This book was released on 2013-01-30 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.

Download or read book Financial Globalization and Inequality Capital Flows as a Two Edged Sword written by Mr.Barry J. Eichengreen and published by International Monetary Fund. This book was released on 2021-01-08 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.