The Effects of Flight on Growth and Investmentin Emerging Markets

Jae-Hyun Suh

Hitotsubashi Journal of Economics, 2022, vol. 63, issue 1, 51-71

Abstract: We investigated the impact of massive foreign-asset purchases by domestic agents (flight) on domestic countriesʼ real GDP growth and investment by employing diverse generalized method of moments estimators. Flight is a matter for concern because it may indicate that domestic investors are fleeing domestic markets. However, our results show that flight is only harmful if there are not enough capital inflows from foreign investors. These results suggest that domestic investors do not significantly substitute foreign assets for domestic assets and, even if they do, domestic firms may not be severely damaged if they can borrow from nonresidents.

Keywords: gross capital flows; flight; stop; GMM estimation; emerging market economies (search for similar items in EconPapers)
JEL-codes: E22 F21 F32 F40 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:63:y:2022:i:1:p:51-71

DOI: 10.15057/hje.2022003

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