What drives portfolio capital inflows into emerging market economies? The role of the Fed's and ECB's balance sheet policies

Michał Ledóchowski and Piotr Żuk

Emerging Markets Review, 2022, vol. 51, issue PB

Abstract: We provide an empirical investigation of the spillovers from the balance sheet policies conducted by the US Federal Reserve (the Fed) and the European Central Bank (the ECB) to gross portfolio capital flows to emerging market economies (EMEs). The analysis is based upon a panel dataset covering 28 EMEs throughout the period of 2009–2019. Our results show that balance sheet expansion by the Fed translates into higher portfolio capital inflows into EMEs. By contrast, portfolio capital flows to EMEs, including to European ones, do not seem to react to changes in the balance sheet conducted by the ECB.

Keywords: Portfolio capital flows; Emerging market economies; Unconventional monetary policy spillovers; Quantitative easing; Balance sheet policies; Longer-term refinancing operations (search for similar items in EconPapers)
JEL-codes: E52 F32 F41 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:51:y:2022:i:pb:s1566014121000893

DOI: 10.1016/j.ememar.2021.100881

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