Capital Inflows and Capital Outflows: Measurement, Determinants, Consequences

Andrew Powell, Dilip Ratha () and Sanket Mohapatra

Business School Working Papers from Universidad Torcuato Di Tella

Abstract: This paper develops new estimates of capital outflows and is the first, to our knowledge, to analyze the determinants, consequences and inter-relationship between inflows and outflows. Given the dynamics and individual country effects, we use a panel-VAR and find that inflows and outflows are inter-related, that lower inflows/higher outflows lead to lower growth, and among other effects to a higher fiscal deficit, which feeds back to lower inflows/higher outflows. These results provide evidence of vicious and virtuous cycles. We find no strong evidence that official flows crowd-in private ones. We conclude it is particularly important for developing countries to maintain prudent policies, and especially adequate fiscal discipline, to avoid vicious and reinforce virtuous cycles.

Pages: 52 pages
Date: 2002-08
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Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:udt:wpbsdt:veinticinco

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