Are capital inflows expansionary or contractionary in the Philippines?

Rogelio Mercado

Journal of Asian Economics, 2020, vol. 67, issue C

Abstract: This paper assesses whether gross capital inflows to the Philippines are expansionary or contractionary in view of the model predictions and multi-country empirical analysis of Blanchard, Ostry, Ghosh, and Chamon (BOGC, 2015). We make use of data for the period 1977–2017, and apply both ordinary least squares and vector autoregressive techniques. The results indicate that total gross inflows are expansionary for both output and credit growth. At a more disaggregated level, we find, consistent with BOGC (2015), that non-bond inflows are expansionary. But contrary to BOGC (2015), we find that bond inflows to the Philippines are also expansionary. Using the Philippine case illustrates the importance of country specific factors in characterizing the macroeconomic effects of capital inflows.

Keywords: Capital inflows; Sterilized intervention; Output growth; Credit growth (search for similar items in EconPapers)
JEL-codes: F32 F41 F43 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Are Capital Inflows Expansionary or Contractionary in the Philippines? (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:67:y:2020:i:c:s1049007820300208

DOI: 10.1016/j.asieco.2020.101176

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