The effects of capital inflows on South Africa's economy

Sean Joss Gossel and Nicholas Biekpe

Applied Financial Economics, 2012, vol. 22, issue 11, 923-938

Abstract: This article investigates the effects of capital inflows on South Africa's macroeconomy and on the transmission mechanisms of credit extension, asset prices and household consumption expenditure. We find that the capital inflows have varied macroeconomic effects. Furthermore, we establish that the central bank uses a strategy of ongoing sterilisation for portfolio inflows and Foreign Direct Investment (FDI), but does not sterilise other inflows. With regard to the impacts of the capital inflows on the transmission mechanisms, the results indicate that only portfolio inflows have a positive impact on private sector credit extension, mortgage extensions and credit card expenditure. In addition, the results confirm that portfolio and other inflows have more of a positive impact on asset prices than FDI. Finally, we establish that FDI and portfolio inflows lead to increased household consumption expenditure on durables while other inflows have a negative effect on all forms of household consumption.

Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/09603107.2011.629982 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apfiec:v:22:y:2012:i:11:p:923-938

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAFE20

DOI: 10.1080/09603107.2011.629982

Access Statistics for this article

Applied Financial Economics is currently edited by Anita Phillips

More articles in Applied Financial Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().