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The reversibility of different types of capital flows to emerging markets

Ozan Sula and Thomas D. Willett

Emerging Markets Review, 2009, vol. 10, issue 4, 296-310

Abstract: We investigate whether some types of capital flows are more likely to reverse than others during currency crises. Earlier statistical testing has yielded conflicting results on this issue. We argue that the problem with the earlier studies is that the degree of variability of capital flows during normal or inflow periods may give little clue to their behavior during crises and it is the latter that is most important for policy. Using data for 35 emerging economies for 1990 through 2003, we confirm that direct investment is the most stable category, but find that contrary to much popular analysis, private loans on average are as reversible as portfolio flows.

Keywords: Capital; flows; Private; loans; Portfolio; flows; Foreign; direct; investment; Currency; crises (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (42)

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Working Paper: Reversibility of Different Types of Capital Flows to Emerging Markets (2006) Downloads
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