EconPapers    
Economics at your fingertips  
 

Capital Inflows, Exchange Rate Regimes and Credit Dynamics in Emerging Market Economies

Robin Boudias

Working Papers from CEPII research center

Abstract: This paper investigates the impact of the exchange rate regime (ERR) on the cycle of capital fl ows, the private credit growth rate and the level of dollarization in emerging market economies. We consider two different panels including 12 and 22 countries over the periods 1980-2010 and 1994-2008, respectively. We estimate a Panel Smooth Transition Regression (PSTR) model in order to assess whether the impact of ERR on credit dynamics is affected by the cyclical component of capital fl ows. Our fi ndings are threefold. First, the ERR has no impact on the cyclical component of capital fl ows. Second, credit expansion is procyclical in economies with pegged curencies. Third, during capital infl ows or low outfl ows periods, economies with fi xed exchange rate regimes show a higher level of dollarization. When outfl ows are sizeable, ERR no longer impacts the level of dollarization. These results suggest that ERR should be an important variable in conceiving the policy mix to cope with domestic credit expansions and liability dollarization.

Keywords: Emerging market economies; capital flows; domestic credit; dollarization; PSTR (search for similar items in EconPapers)
JEL-codes: C33 E42 F31 O16 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-ifn, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
http://www.cepii.fr/PDF_PUB/wp/2014/wp2014-17.pdf (application/pdf)

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:cii:cepidt:2014-17

Access Statistics for this paper

More papers in Working Papers from CEPII research center Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2023-08-12
Handle: RePEc:cii:cepidt:2014-17