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Capital flow transitions: Domestic factors and episodes of gross capital inflows

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  • Mercado, Rogelio V.
Abstract
This paper extends existing capital flow literature by considering capital flow episode transitions. Applying a state-transition framework, we view episodes of gross capital inflows as different states in which economies transition to and from. Abstracting from time-varying common factors by using fixed transitional likelihoods and average values of domestic factors, the findings show that cross-country variation in transitional likelihoods strongly covary with the duration and occurrence and less on idiosyncratic domestic factors. Although the results imply limited scope in backing global cyclical financial flows, this study offers new perspective in understanding cross-country propensities on capital flow transitions.

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  • Mercado, Rogelio V., 2019. "Capital flow transitions: Domestic factors and episodes of gross capital inflows," Emerging Markets Review, Elsevier, vol. 38(C), pages 251-264.
    • Handle: RePEc:eee:ememar:v:38:y:2019:i:c:p:251-264
    DOI: 10.1016/j.ememar.2019.02.002
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    Cited by:

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    More about this item

    Keywords

    Capital flow transitions; Capital flow episodes; Surges; Sudden stops;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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