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Capital Flows to EU New Member States: Does Sector Destination Matter?

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  • Ms. Pritha Mitra

Abstract

The 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.

Suggested Citation

  • Ms. Pritha Mitra, 2011. "Capital Flows to EU New Member States: Does Sector Destination Matter?," IMF Working Papers 2011/067, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2011/067
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    Cited by:

    1. Comunale, Mariarosaria, 2022. "A panel VAR analysis of macro-financial imbalances in the EU," Journal of International Money and Finance, Elsevier, vol. 121(C).
    2. repec:agr:journl:v:2(602):y:2015:i:2(602):p:223-236 is not listed on IDEAS
    3. Antje Hildebrandt & Reiner Martin & Katharina Steiner & Karin Wagner, 2012. "Residential Property Markets in CESEE EU Member States," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 8-30.
    4. Zsóka Kóczán, 2018. "Late to the Game? Capital Flows to the Western Balkans," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 20(2), pages 33-67, December.
    5. Petris Sorina, 2012. "Capital Flows And Their Sectoral Destinations," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 825-829, July.
    6. Šimić Vladimir & Malešević-Perović Lena, 2022. "FDI and Economic Growth: A new Look from the Sectoral Perspective," Naše gospodarstvo/Our economy, Sciendo, vol. 68(4), pages 1-11, December.
    7. Arcand, Jean-Louis & Kumar, Shekhar Hari & Hongler, Max-Olivier & Rinaldo, Daniele, 2023. "Can one hear the shape of a target zone?," Journal of Mathematical Economics, Elsevier, vol. 107(C).
    8. Mara Pirovano, 2013. "Household and firm leverage, capital flows and monetary policy in a small open economy," Working Paper Research 246, National Bank of Belgium.
    9. Marinela GEAMĂNU, 2015. "Analysis of the evolution of foreign direct investment in the European Union, amid the global economic crisis," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(603), S), pages 223-236, Summer.
    10. Mario Pečarić & Tino Kusanović & Pavle Jakovac, 2021. "The Determinants of FDI Sectoral Structure in the Central and East European EU Countries," Economies, MDPI, vol. 9(2), pages 1-16, April.
    11. Jean-Pierre Allegret & Audrey Allegret-Sallenave, 2016. "Intra-European Union Imbalances and Cyclical Position: Does Monetary Policy Matter?," Post-Print hal-01410832, HAL.
    12. Predrag Bjelić & Danijela Jaćimović & Ivan Tašić, 2013. "Effects Of The World Economic Crisis On Exports In The Ceec: Focus On The Western Balkans," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 58(196), pages 71-98, January –.
    13. Grzegorz Tchorek, 2016. "Foreign Direct Investment and Investment Development Path. The Case of Visegrad Countries (Bezposrednie Inwestycje Zagraniczne a Inwestycyjna Sciezka Rozwoju. Przypadek krajow grupy Wyszehradzkiej)," Research Reports, University of Warsaw, Faculty of Management, vol. 2(22), pages 201-212.

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    Keywords

    WP; GDP; GDP growth; FDI; Bulgaria;
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