Capital flows to emerging economies: Minsky in the tropics
Capital inflows to emerging economies have a significant exogenous component, they are very large when scaled to the size of the domestic financial sectors of recipients and they have large real macroeconomic effects. They also sow the seeds for the ensuing sudden stops, or capital flow reversals, observed in financial crises in emerging markets. This paper tests the implications of applying the Kindleberger--Minsky model of financial crises to capital account reversals in emerging economies, or sudden stops as they have been called in the recent literature. It uses a panel-probit framework with heterogeneous unobserved country effects. The most important variables that account for sudden stops are preceding capital surges, the share of flows other than foreign direct investment, the size of the current account deficit, contagion from sudden stops in other emerging markets and the ratio of external debt to exports. The main policy conclusion is that emerging economies need specific policies to deal with capital surges. In addition, macroeconomic policies geared toward preserving sustainable macroeconomic balance may be necessary to avoid sudden stops but they are clearly insufficient. Copyright The Author 2010. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 35 (2011)
Issue (Month): 4 ()
|Contact details of provider:|| Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK|
Fax: 01865 267 985
Web page: http://www.cje.oupjournals.org/
|Order Information:||Web: http://www.oup.co.uk/journals|
When requesting a correction, please mention this item's handle: RePEc:oup:cambje:v:35:y:2011:i:4:p:663-683. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.