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Monetary policy and capital flow implications on economic growth in BRICS countries

Author

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  • Ergin Akalpler

    (Cyprus West University)

  • Simbarashe Hove

    (Near East University, FEAS)

Abstract

This study investigates monetary policy and capital flow implications on economic growth in emerging economies so-called BRICS countries between 2001 and 2015. The causality results revealed a unidirectional causality from foreign direct investment and broad money to total reserves, real GDP per capita and broad money to total reserves, broad money to total reserves and real interest rates as a percentage, foreign direct investment and commercial bank and another lending, total changes in external debt stock and commercial bank and another lending, foreign direct investments and real interest rates as a percentage, foreign direct investment and domestic credit provided by the financial sector, and domestic credit provided by the financial sector and real GDP per capita. A bidirectional causality holds for domestic credit provided by the financial sector and broad money to total reserves, and real interest rates as a percentage and commercial bank and another lending. The results suggest that policies should include restrictions on capital flows, targeted monetary policy for both money supply and interest rates, an external debt ceiling, broadening financial regulations, and domestic institutional strengthening.

Suggested Citation

  • Ergin Akalpler & Simbarashe Hove, 2022. "Monetary policy and capital flow implications on economic growth in BRICS countries," International Journal of Economic Policy Studies, Springer, vol. 16(1), pages 253-274, February.
    • Handle: RePEc:spr:ijoeps:v:16:y:2022:i:1:d:10.1007_s42495-021-00076-z
    DOI: 10.1007/s42495-021-00076-z
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    More about this item

    Keywords

    Monetary policy; Capital flows; Causality; Fixed effects; BRICS; Fragility;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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