The Interaction of Macroeconomic Variables on Capital Inflow in Emerging Market Countries in ASEAN: Panel Error Correction Model Approach

Hasdi Aimon, Rika Utami Restihani and Anggi Kurniadi
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Hasdi Aimon: Faculty of Economics, Universitas Negeri Padang, Padang, Indonesia
Rika Utami Restihani: Faculty of Economics, Universitas Negeri Padang, Padang, Indonesia

The Journal of Social Sciences Research, 2019, vol. 5, issue 9, 1357-1364

Abstract: This study investigates the short and long-term determinants of capital inflows in emerging market countries in ASEAN using the Panel Error Correction Model. This study uses panel data with a time series from 2000 to 2017 and a cross-section of five countries (Indonesia, Malaysia, Philippines, Thailand, and Vietnam). This study has three important findings. First, conditions of exchange rate, foreign reserve, and lending rate disrupt the equilibrium of capital inflow in the short term. Second, current account conditions disrupt the equilibrium in the long term. Third, capital inflow will return to equilibrium in the long term. Therefore, it is highly recommended for emerging market countries in ASEAN to stabilize the variables that disrupt the equilibrium in the long and short term to stabilize their capital inflow.

Keywords: Capital inflow; Macroeconomic variables; Panel error correction model; Emerging market countries; ASEAN. (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:arp:tjssrr:2019:p:1357-1364

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