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The impact of U.S. monetary policy uncertainty on abnormal cross-border capital flows

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  • Zhou, Ye
  • Zhang, Wenbo
  • Che, Jinfang
  • Ma, Sichao

Abstract

Using quarterly panel data from 67 economies (1995–2023), this study examines how U.S. monetary policy uncertainty (USMPU) affects abnormal cross-border capital flows. The study finds that elevated USMPU reduces the likelihood of Surge and Flight, increases the likelihood of Stop and Retrenchment, and significantly reduces international capital flow activity. The implementation of macroprudential policies can significantly mitigate abnormal flows on the inflow side of capital. Furthermore, economies with more open capital accounts and less flexible exchange rates are more susceptible to these effects.

Suggested Citation

  • Zhou, Ye & Zhang, Wenbo & Che, Jinfang & Ma, Sichao, 2025. "The impact of U.S. monetary policy uncertainty on abnormal cross-border capital flows," Finance Research Letters, Elsevier, vol. 86(PE).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pe:s1544612325020094
    DOI: 10.1016/j.frl.2025.108755
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    References listed on IDEAS

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