Capital Flows to Emerging Market Economies: A Brave New World?

By Shaghil Ahmed, A. Zlate. 2013

675 citations recorded by the source corpus.

We examine the determinants of net private capital inflows to emerging market economies (EMEs) since 2002. Our main findings are: First, growth and interest rate differentials between EMEs and advanced economies and global risk appetite are statistically and economically important determinants of net private capital inflows. Second, there have been significant changes in the behavior of net inflows from the period before the recent global financial crisis to the post-crisis period, especially for portfolio inflows, partly explained by the greater sensitivity of such flows to interest rate differentials since the crisis. Third, capital controls introduced in recent years do appear to have discouraged both total and portfolio net inflows. Finally, we find positive effects of unconventional U.S. monetary policy on EME inflows, especially portfolio inflows. Even so, U.S. unconventional policy is one among several important factors influencing flows.

Subfields: Economics and Econometrics, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/fab6794c45d62f691a31ff42f48719e98dfdb009

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Citations in the corpus

U.S. Unconventional Monetary Policy and Transmission to Emerging Market Economies (2014, neutral): “Ahmed and Zlate (2013) analyze the effects of QE on capital flows to EMEs, focusing on the actual asset purchases rather than on policy announcements. Fratzscher et al. (2012) also explore spillover effects of U.S. QE on foreign economies and, similar to Ahmed and Zlate (2013), they focus mostly on ”
Spillovers from United States Monetary Policy on Emerging Markets: Different this Time? (2014, neutral): “Remaining papers mostly focus on the initial phase of UMP, before the Fed’s taper talk: DePooter, Robitaille and Zdinak (2014), Moore, Nam, Suh, and Topper (2013), and Chen, Filardo, He, and Zhu (2012), as well as Ahmed and Zlate (2013) and Fratzscher, LoDuca, and Straub (2013) which study the effec”
Federal Reserve Policy in an International Context (2017, background): “A discussion of policy implications should begin with the fact that considerable heterogeneity exists in the financial sensitivity of countries to policy actions at the “center,” a conclusion confirmed by a large and growing literature (Fratzscher, 2012; Ahmed and Zlate, 2014; Bowman, Londono, and S”
Spillovers of U.S. unconventional monetary policy to emerging markets: The role of capital flows (2017, methodology): “, 2014, Ahmed and Zlate, 2014). Other studies use high frequency frameworks and event study approaches (International Monetary Fund, 2013, Fratzscher et al., 2013, Rai and Suchanek, 2014), or VAR models with aggregated capital flows (Tillmann, 2014, Dahlhaus and Vasishtha, 2014). Exemplarily, Fratzs”
U.S. Monetary Policy and International Risk Spillovers (2019, background): “(2014), Ahmed and Zlate (2014)). I show that this is not the case: even countries with good fundamentals, EMEs and AEs alike, can be affected by risk shocks. Some other papers argue in a similar way that at the business cycle quarterly frequency there is not much insulation from better fundamentals,”
Self-oriented monetary policy, global financial markets and excess volatility of international capital flows (2015, positive): “In particular Ahmed and Zlate (2014), Chen et al. (2015), Bowman et al. (2015), and Chen et al. (2014) examine the impact of the recent US unconventional monetary policy on emerging markets. Except for Chen et al. (2015), who look at the response of emerging market inflation and real GDP, these pape”
How Effective are Macroprudential Policies? An Empirical Investigation (2017, methodology): “Table 3 displays the correlations between MAPP measures, capital flow measures, and monetary policy for the 19 emerging market economies covered by Ahmed and Zlate (2014)’s capital flow measure database.(10) Even in this subset of emerging markets, the correlations between macroprudential and moneta”
The Volatility of Capital Flows in Emerging Markets: Measures and Determinants (2017, background): “24 See, for instance, Ahmed and Zlate (2014). 25 Notably, in equation (28), Devereux and Sutherland (2009) show how home-country holdings of foreign equities and bonds depend on a set of domestic and foreign indicators.”
Oil Prices and Emerging Market Exchange Rates (2013, background): “According to a report by the Institute of International Finance (Suttle et al. 2012), net private capital inflows to emerging economies are estimated to have been $990 billion in 2010.”