Central Bank of Chile paper identifies causes of sudden capital flows
A working paper published by the Central Bank of Chile in August studies the factors behind sharp changes in capital flows, finding that debt is the most important determinant.
The authors, Kristin Forbes and Francis Warnock, analyse data on gross movements of capital in and out of 50 emerging and developed countries over the period 1980–2009. The paper finds that 80% of inward flows and 70% of outward are primarily caused by changes in debt flows. These debt dynamics, the authors say, are driven by investors' risk aversion and regional contagion effects.
As a result, "understanding debt flows is critically important to understanding extreme capital flow movements", the researchers say. They suggest that work studying credit booms is particularly relevant and argue more work in needed in understanding capital flight and retrenchment.
Click here to read the paper.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: http://subscriptions.centralbanking.com/subscribe
You are currently unable to print this content. Please contact info@centralbanking.com to find out more.
You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@centralbanking.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@centralbanking.com
Most read
- Initiative of the year: the Netherlands Bank’s ChatDNB
- Central Banking Awards 2024: fourth round announced
- Payments and market infrastructure development: Federal Reserve Systems’ FedNow