Exchange Rate Regimes as Thresholds: The Main Determinants of Capital Inflows in Emerging Market Economies

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.
TED University Trade Research Center, 13 - 14 Haziran 2019


Exchange Rate Regimes and Business Cycles: An Empirical Investigation
Erdem, Fatma Pinar; Özmen, Erdal (2015-11-01)
This paper empirically investigates the impacts of domestic and external factors along with exchange rate regimes (ERRs) on business cycles in a large panel of advanced and emerging market economies (EME). The results for classical business cycles suggest that EME tend to experience much deeper recessions and relatively steeper expansions during almost the same duration. The probability of expansions significantly increases with ERR flexibility. Our results strongly support floating ERR for both advanced an...
Globalisation and Governance: Thresholds for the Impacts of the Main Determinants of Capital Inflows
Taşdemir, Fatma; Özmen, Erdal (null, 2019-09-07)
This paper investigates whether the impacts of the main push (global financial conditions, GFC) and pull (growth) factors on capital inflows are invariant to endogenously estimated threshold levels for structural domestic conditions (SDC) represented by governance/institutional quality, trade openness, de facto international financial integration and de jure financial openness in emerging market and developing economies. Our results strongly suggest that, for all the components of capital inflows, the impac...
Financial development and energy consumption in emerging markets: structural shifts in causal linkages
Durusu Çiftçi, Dilek; Soytaş, Uğur; Nazlıoğlu, Şaban (null; 2018-11-03)
This study examines dynamic causal interrelationships among financial development, energy consumption, and economic growth in the emerging markets by focusing on accounting for structural changes in causal linkages. We first employ the Toda-Yamamoto causality framework and later augment it with Fourier approximation to account for structural shifts – including gradual/smooth shifts. The empirical findings show that accounting for gradual structural shifts matter for the causal linkages between financial dev...
Exchange rate pass-through to domestic prices in Turkish economy
Alper, Koray; Gaygısız Lajunen, Esma; Department of Economics (2003)
In this study, determinants and the evolution of the exchange rate passthrough to domestic inflation in the Turkish economy is analyzed. The analyses cover the 1987-2003 period. In the analyses, single equation أError Correction Modelsؤ are used to estimate the exchange rate pass-through. Estimation results suggest that alike other emerging countries, the degree of exchange rate passthrough to domestic prices is high and the pass-through is completed in a very short time span. Estimations results also indic...
Risk Transmission from Oil and Natural Gas Futures to Emerging Market Mutual Funds
Ewing, Bradley T.; Gormus, Alper; Soytaş, Uğur (2018-01-01)
This study evaluates the impacts of energy markets on emerging market mutual funds (EMMFs). In particular, we investigate the volatility transmission between these funds and the oil and natural gas prices. The findings suggest significant risk spillover from the energy markets to EMMFs. Furthermore, we find a large number of EMMFs' risk transmitting to oil prices and almost all of the EMMFs' risk transmitting to natural gas prices. By dividing the sample into two (before and after 2008), we find the EMMFs' ...
Citation Formats
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: