Have QE Programs Affected Capital Flows to Emerging Markets?: A Regional Analysis

Claudia Ramirez Bulos and Miriam González (miriam.gonzalez@banxico.org.mx)
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Miriam González: Banco de México

Chapter 6 in International Spillovers of Monetary Policy, 2017, pp 155-188 from Centro de Estudios Monetarios Latinoamericanos, CEMLA

Abstract: In the aftermath of the 2008-2009 financial crisis, international capital flows to emerging markets increased substantially and have remained close to alltime highs, although with volatility. The most recent episode of capital inflows has taken place in the context of extremely accommodative monetary policies in advanced economies, characterized by exceptionally low interest rates and the implementation of unconventional monetary policies, which have generated additional reductions in long-term interest rates. This paper presents an empirical analysis of the drivers of international capital flows to emerging economies in the postcrisis period. Using the pull versus push framework, we estimate a panel for 15 emerging economies, and we find that external factors remain the main determinants of capital flows. Within external factors, QE programs implemented in the United States, measured both directly through treasuries purchases and indirectly through the long-term interest rate, had an impact on capital flows. However, the effect was different across regions, playing an important role in Asia and Latin America. Finally, we found that risk aversion seems to be an important driver of these flows for all regions.

Keywords: capital flows; emerging economies; foreign direct investment; portfolio flows; USA quantitative easing (search for similar items in EconPapers)
JEL-codes: F32 G11 (search for similar items in EconPapers)
Date: 2017
Note: Joint Research Program XX Meeting of the Central Bank Researchers Network
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Citations: View citations in EconPapers (1)

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