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The impact of sudden stops in capital flows on output and investment: Selected emerging markets

Author

Listed:
  • Noha EMARA

    (Department of Economics, Rutgers University, USA)

  • Congcong NI

    (Department of Economics, Rutgers University, USA)

  • Ya GAO

    (Department of Economics, Rutgers University, USA)

Abstract

We evaluate how vulnerable the emerging markets are to sudden stops, that is, capital inflow reversals, using panel data for 12 emerging economies for the period 1976–2002 that experienced such reversals. We investigate the impact of sudden stops on the macroeconomic indicators of economic growth and investment by employing the Generalized Method of Moments (GMM) estimation methodology. A robustness check is performed using regional groups and introducing additional control variables. We find that sudden stops have lagging, negative, and robust effect on output and investment, while the effect on investment is not always robust.

Suggested Citation

  • Noha EMARA & Congcong NI & Ya GAO, 2018. "The impact of sudden stops in capital flows on output and investment: Selected emerging markets," Turkish Economic Review, EconSciences Journals, vol. 5(4), pages 316-327, December.
    • Handle: RePEc:cvv:journ2:v:5:y:2018:i:4:p:316-327
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    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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