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Volatility of short term capital flows, financial anarchy and private investment in emerging markets

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  • Demir, Firat

Abstract

Using micro-level panel data, the paper analyses the impacts of short-term capital flow volatility on new fixed investment spending of publicly traded real sector firms in three major emerging markets that are Argentina, Mexico and Turkey. The empirical results including comprehensive sensitivity tests suggest that increasing volatility of capital inflows has an economically and statistically significant negative effect on new investment spending of private firms. Accordingly, a 10 per cent increase in capital flow volatility reduces fixed investment spending in the range of 1-1.7, 2.3-15.1, and 1 per cent in Argentina, Mexico and Turkey respectively.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3080.

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Date of creation: Oct 2006
Date of revision: May 2007
Handle: RePEc:pra:mprapa:3080

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Keywords: Capital Flow Volatility; Macroeconomic Uncertainty; Private Investment; Financial Liberalisation;

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Cited by:
  1. King Dejardin, Amelita, 2009. "Gender (in)equality, globalization and governance," ILO Working Papers, International Labour Organization 432727, International Labour Organization.

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