Abstract
This article classifies extreme net capital flow episodes into four types and analyzes the macroeconomic impacts of each type. First, we find that all types of episodes increased drastically in the 2000s relative to previous years. Second, we conclude that liability-flow-driven episodes have more significant macroeconomic impacts than do asset-flow-driven episodes. Third, we show that only drastic positive net capital flows that were driven by liability flows were associated with a higher probability of banking crises in the 2000s. The results suggest that the detailed classification of extreme net capital flows provides insight into these movements’ macroeconomic impacts and policy implementations.
Original language | English |
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Pages (from-to) | 289-305 |
Number of pages | 17 |
Journal | Emerging Markets Finance and Trade |
Volume | 53 |
Issue number | 2 |
DOIs | |
State | Published - 1 Feb 2017 |
Keywords
- Banking crises
- capital flows
- sudden stops
- surges