Determinants and Repercussions of the Composition of Capital Inflows

Author/Editor:

Mark S. Carlson ; Leonardo Hernández

Publication Date:

May 1, 2002

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The Mexican, Asian, and Russian crises of the mid- and late 1990s have renewed interest among policymakers in the determinants and effects of private capital inflows. This paper analyzes whether policies can affect the composition of capital inflows and whether different compositions aggravate crises. The results support the view that, while fundamentals matter, capital controls can affect the mix of capital inflows that countries receive. The results also show that during the Asian crisis, countries with more yen-denominated debt faired worse, while during the Mexican crisis larger short-term debt stocks increased the severity of the crisis.

Series:

Working Paper No. 2002/086

Subject:

Balance of payments Capital flows Capital inflows Exchange rate arrangements Foreign direct investment Foreign exchange Real exchange rates

English

Publication Date:

May 1, 2002

ISBN/ISSN:

9781451850895/1018-5941

Stock No:

WPIEA0862002

Pages:

50

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