Measuring and explaining the volatility of capital flows to emerging countries

Carmen Broto, Javier Díaz-Cassou and Aitor Erce

Journal of Banking & Finance, 2011, vol. 35, issue 8, 1941-1953

Abstract: This paper analyzes the determinants of the volatility of the various types of capital inflows into emerging countries. After calculating a proxy of the volatility of FDI, portfolio and bank inflows, we use a panel data model to study their relationship with a broad set of explanatory variables. Our results highlight the difficulties policy-makers face in stabilizing capital flows. Thus, we show that since 2000 global factors beyond the control of emerging economies have become increasingly significant relative to country-specific drivers. However, we identify some domestic macroeconomic and financial factors that appear to reduce the volatility of certain capital flows without increasing that of others.

Keywords: Capital; flows; Volatility; Panel; data; Emerging; markets (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (59)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:35:y:2011:i:8:p:1941-1953

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