Which Net Capital Flows Matter?

Inbin Hwang, Deokjong Jeong, Hyungsoon Park, Sunyoung Park

Research output: Contribution to journalArticlepeer-review

8 Scopus citations

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 languageEnglish
Pages (from-to)289-305
Number of pages17
JournalEmerging Markets Finance and Trade
Volume53
Issue number2
DOIs
StatePublished - 1 Feb 2017

Keywords

  • Banking crises
  • capital flows
  • sudden stops
  • surges

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