Not all surges of gross capital inflows are alike
ISSN: 0144-3585
Article publication date: 14 May 2018
Issue publication date: 14 May 2018
Abstract
Purpose
The purpose of this paper is to consider the transition of surge episodes to stop episodes and differentiates between two types of surges, namely, surges that end in stops and surges that end in normal episodes.
Design/methodology/approach
Previous studies show that surges end in output contractions, crises, and reversals of capital inflows. However, when one looks closely at the data, more than half of surges end in normal episodes at least four quarters following the last surge quarter.
Findings
The results show the varying significance of global and domestic factors correlated with the occurrence of surges leading to stops and the size of gross inflows during these two types of surges.
Originality/value
The findings highlight the importance of differentiating between these two types of surges as it leaves scope for policy design in safeguarding financial stability amidst surging capital inflows.
Keywords
Acknowledgements
The author is highly indebted to Philip R. Lane for his valuable comments and suggestions. The author is also grateful to Agustin Benetrix, Vahagn Galstyan, Hiro Ito, Frank Warnock, and anonymous referees for their comments and suggestions on this paper.
Citation
Mercado, R.V. (2018), "Not all surges of gross capital inflows are alike", Journal of Economic Studies, Vol. 45 No. 2, pp. 326-347. https://doi.org/10.1108/JES-01-2017-0007
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited