Gross capital flows: dynamics and crises
Tatiana Didier (),
Aitor Erce () and
Sergio Schmukler ()
No 5768, Policy Research Working Paper Series from The World Bank
This paper analyzes the joint behavior of international capital flows by foreign and domestic agents -- gross capital flows -- over the business cycle and during financial crises. The authors show that gross capital flows are very large and volatile, especially relative to net capital flows. When foreigners invest in a country, domestic agents tend to invest abroad, and vice versa. Gross capital flows are also pro-cyclical, with foreigners investing more in the country and domestic agents investing more abroad during expansions. During crises, especially during severe ones, there is retrenchment, that is, a reduction in both capital inflows by foreigners and capital outflows by domestic agents. This evidence sheds light on the nature of shocks driving capital flows and helps discriminate among existing theories. The findings seem consistent with shocks that affect foreign and domestic agents asymmetrically, such as sovereign risk and asymmetric information.
Keywords: Emerging Markets; Macroeconomic Management; Economic Theory&Research; Debt Markets; Capital Flows (search for similar items in EconPapers)
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 (18) Track citations by RSS feed
Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... ered/PDF/WPS5768.pdf (application/pdf)
Journal Article: Gross capital flows: Dynamics and crises (2013)
Working Paper: Gross capital flows: Dynamics and crises (2012)
Working Paper: Gross capital flows: dynamics and crises (2011)
Working Paper: Gross Capital Flows: Dynamics and Crises (2011)
Working Paper: Gross Capital Flows: Dynamics and Crises (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:5768
Access Statistics for this paper
More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().