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Exchange Rate Regimes as Thresholds: The Main Determinants of Capital Inflows in Emerging Market Economies
Date
2019-06-14
Author
Özmen, Erdal
Metadata
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This study investigates whether the impacts of the main common push (global financial conditions, GFC) and country-specific pull (growth) factors on capital inflows are invariant to the prevailing exchange rate regimes (ERRs) in emerging market economies. Our results suggest that endogenously estimated ERR thresholds do matter especially for the impact of GFC. The impact of GFC is substantially high under more flexible ERRs for all capital inflow types except FDI. FDI inflows are basically determined by the pull factor across all ERRs. Portfolio inflows are mainly determined by GFC. The sensitivity of aggregate and other investment inflows to the pull factor seems to be much higher under more rigid ERRs. Our results are broadly in line with the literature suggesting that credible managed ERRs encourage capital inflows by allowing countries to import monetary policy credibility of the center country and to provide exchange rate guarantee.
Subject Keywords
Capital Inflows
,
Emerging Market Economies
,
Exchange Rate Regimes
,
Global Financial Conditions
,
Panel Threshold Model
URI
https://hdl.handle.net/11511/73724
http://erc.metu.edu.tr/en/system/files/menu/series18/1810.pdf
Conference Name
TED University Trade Research Center, 13 - 14 Haziran 2019
Collections
Department of Economics, Conference / Seminar
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E. Özmen, “Exchange Rate Regimes as Thresholds: The Main Determinants of Capital Inflows in Emerging Market Economies,” presented at the TED University Trade Research Center, 13 - 14 Haziran 2019, Ankara, Türkiye, 2019, Accessed: 00, 2021. [Online]. Available: https://hdl.handle.net/11511/73724.
