Hot money and economic performance: An empirical analysis
Jarita Duasa () and
Salina Kassim ()
MPRA Paper from University Library of Munich, Germany
The present study empirically examines the importance of foreign portfolio investment (FPI) or hot money from certain investor(s) or country(s) on Malaysian economic performance. In methodology, the study uses vector error correction (VECM) model of FPI inflows from major investors such as the United States, United Kingdom, Singapore and Hong Kong and Malaysian real GDP using quarterly data covering the period of Q1:1991 to Q3:2007. For further inferences, the study adopts an innovation accounting by simulating variance decompositions (VDC) and impulse response functions (IRF). It is found that the country’s GDP is highly attributable to UK FPI inflow especially in the long run.
Keywords: Foreign portfolio investment; Economic performance; VECM; Impulse Response; Variance Decomposition (search for similar items in EconPapers)
JEL-codes: C12 C32 F32 G15 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:12470
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