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Surges during sudden stops: Substitution effect between sectoral capital inflows in extreme episodes

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  • Yang, Zheng
  • You, Yu

Abstract

We empirically examine the correlation between extreme episodes of sectoral capital inflows, using a sample of 50 advanced and emerging economies from 2000Q1 to 2021Q4. We document that a sudden stop in one financial sector is often accompanied by a surge in another sector, especially in countries with well-developed financial market.

Suggested Citation

  • Yang, Zheng & You, Yu, 2023. "Surges during sudden stops: Substitution effect between sectoral capital inflows in extreme episodes," Economics Letters, Elsevier, vol. 230(C).
    • Handle: RePEc:eee:ecolet:v:230:y:2023:i:c:s0165176523002884
    DOI: 10.1016/j.econlet.2023.111263
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    References listed on IDEAS

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    More about this item

    Keywords

    Capital inflow; Surge; Sudden stop; Substitution effect; Financial development;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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