Capital Flows to EU New Member States: Does Sector Destination Matter?
AbstractThe recent boom-bust episode in Emerging Europe was largely the product of surges and sudden stops in capital inflows. This paper empirically argues that the sectors into which capital flows determines their impact on GDP growth. Applying data from EU New Member States, it is found that capital flows into real estate have a greater impact on swings in GDP than other sectors, irrespective of a country's exchange rate or fiscal policy. Consequently, as new waves of capital inflows spread to emerging markets, policies may usefully focus on supporting capital inflows towards economic sectors that minimize large swings in GDP.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 11/67.
Date of creation: 01 Mar 2011
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-05-14 (All new papers)
- NEP-EEC-2011-05-14 (European Economics)
- NEP-EUR-2011-05-14 (Microeconomic European Issues)
- NEP-OPM-2011-05-14 (Open Economy Macroeconomic)
- NEP-TRA-2011-05-14 (Transition Economics)
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