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Analysis of the impact of global uncertainty on abnormal cross-border capital flows

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  • Deng, Chuang
  • Xie, Jingxuan
  • Zhao, Xiuyi

Abstract

This paper econometrically analyzes the effects of policy and financial uncertainty on abnormal cross-border capital flows with the panel probit model, further exploring the drivers of abnormal cross-border capital flows and their heterogeneity across economies. Results reveal that the occurrence of abnormal cross-border capital flows is clustered during periods of high uncertainty. Rising financial uncertainty significantly increases the probability of capital stops and retrenchments, whereas policy uncertainty does not have a positive impact on them. Abnormal cross-border capital flows in developed economies are more evenly driven by uncertainty, international and domestic factors than those in emerging economies, which are mainly affected by uncertainty.

Suggested Citation

  • Deng, Chuang & Xie, Jingxuan & Zhao, Xiuyi, 2023. "Analysis of the impact of global uncertainty on abnormal cross-border capital flows," International Review of Economics & Finance, Elsevier, vol. 87(C), pages 338-346.
    • Handle: RePEc:eee:reveco:v:87:y:2023:i:c:p:338-346
    DOI: 10.1016/j.iref.2023.05.002
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    More about this item

    Keywords

    Financial uncertainty; Economic policy uncertainty; Abnormal cross-border capital flows; Emerging economies; Developed economies;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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