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An Empirical Analysis on Capital Flows: The Case of Korea and Mexico

Author

Listed:
  • Yung-Hsiang Ying

    () (Institute of Interdisciplinary Studies, National Sun Yat-Sen University)

  • Yoonbai Kim

    () (Department of Economics, University of Kentucky)

Abstract

This paper discusses causes of capital flows in Korea and Mexico. Both countries received substantial amounts of foreign capital in the late 1980s and early 1990s. International capital helped these countries achieve a higher standard of living and faster economic growth. However, undesirable macroeconomic effects such as appreciation of real exchange rate and widening current account deficits usually accompany foreign capital inflows. The vector autoregressive (VAR) method is applied to investigate the underlying shocks causing the capital inflows. The main findings are that the U.S. business cycle and shocks to foreign interest rates account for more than 50% of capital inflows to both countries in the past two decades.

Suggested Citation

  • Yung-Hsiang Ying & Yoonbai Kim, 2001. "An Empirical Analysis on Capital Flows: The Case of Korea and Mexico," Southern Economic Journal, Southern Economic Association, vol. 67(4), pages 954-968, April.
  • Handle: RePEc:sej:ancoec:v:67:4:y:2001:p:954-968
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    Citations

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    Cited by:

    1. Tomislav Globan & Vladimir Arčabić & Petar Sorić, 2016. "Inflation in New EU Member States: A Domestically or Externally Driven Phenomenon?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(1), pages 154-168, January.
    2. Tidiane KINDA, 2010. "Increasing Private Capital Flows To Developing Countries: The Role Of Physical And Financial Infrastructure In 58 Countries, 1970-2003," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 10(2).
    3. Thomas Fullerton & Miwa Hattori & Cuauhtémoc Calderón, 2001. "Error correction exchange rate modeling: Evidence for Mexico," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 25(3), pages 358-368, September.
    4. Hardik A. Marfatia, 2016. "The Role of Push and Pull Factors in Driving Global Capital Flows," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot GmbH, Berlin, vol. 62(2), pages 117-146.
    5. Ying, Yung-Hsiang & Kuan, Chung-Ming & Tung, Chris Y. & Chang, Koyin, 2013. "“Capital mobility in East Asian Countries is not so high”: Examining the impact of sterilization on capital flows," China Economic Review, Elsevier, vol. 24(C), pages 55-64.
    6. Payne, James E., 2005. "Savings-investment dynamics in Mexico," Journal of Policy Modeling, Elsevier, vol. 27(5), pages 525-534, July.
    7. Tomislav Globan, 2015. "Financial integration, push factors and volatility of capital flows: evidence from EU new member states," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(3), pages 643-672, August.
    8. repec:taf:pocoec:v:30:y:2018:i:4:p:482-505 is not listed on IDEAS
    9. Anton Jevcak & Ralph Setzer & Massimo Suardi, 2010. "Determinants of Capital Flows to the New EU Member States Before and During the Financial Crisis," European Economy - Economic Papers 2008 - 2015 425, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    10. Levent, Korap & Özgür, Aslan, 2007. "Exogenous characteristics of short-term capital flows: can they be under control? evidence from Turkey," MPRA Paper 19504, University Library of Munich, Germany.
    11. Ali Askin Culha, 2006. "A Structural VAR Analysis of the Determinants of Capital Flows into Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 6(2), pages 11-35.
    12. repec:emx:esteco:v:33:y:2018:i:1:p:117-149 is not listed on IDEAS
    13. Insukindro INSUKINDRO & Arti ADJI & Aryo ALIYUDANTO, 2016. "Analysis of the Unanticipated Factors in Portfolio Inflows to Indonesia: A SVAR Approach: 2001-2012," Journal of Economics Library, KSP Journals, vol. 3(2), pages 327-341, June.
    14. López Noria Gabriela & Zamudio Fernández Juan José, 2018. "The Effect of Uncertainty on Foreign Direct Investment: the Case of Mexico," Working Papers 2018-03, Banco de México.
    15. Mr Insukindro & Arti Adji & Aryo Aliyudanto, 2014. "Analysis of the Unanticipated Factors in Portfolio Inflows to Indonesia: A SCVAR Approach, 2000: Q1 - 2012: Q4," EcoMod2014 7019, EcoMod.
    16. Kinda, Tidiane, 2008. "Les déterminants des flux de capitaux privés dans l’UMOA: Une approche empirique sur données de panel
      [The determinants of private capital inflows in WAEMU: A panel data approach]
      ," MPRA Paper 19159, University Library of Munich, Germany.
    17. Gil Kim & Lian An & Yoonbai Kim, 2015. "Exchange Rate, Capital Flow and Output: Developed versus Developing Economies," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(2), pages 195-207, June.
    18. Kinda, Tidiane, 2007. "Increasing private capital flows to developing countries: The role of physical and financial infrastructure," MPRA Paper 19163, University Library of Munich, Germany.
    19. Ali Askin Culha, 2006. "A Structural VAR Analysis of the Determinants of Capital Flows Into Turkey," Working Papers 0605, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    20. Yoonbai Kim & Gil Kim, 2012. "The Renminbi Debate: A Review of Issues and Search for Resolution," Chapters,in: Asian Responses to the Global Financial Crisis, chapter 4 Edward Elgar Publishing.
    21. Korap, Levent, 2010. "Identification of ‘pull’ & ‘push’ factors for the portfolio flows: SVAR evidence from the Turkish economy," MPRA Paper 24275, University Library of Munich, Germany.
    22. Ibarra-Ramírez Raúl & Téllez León Elizabeth, 2017. "Are all types of capital flows driven by the same factors? Evidence from Mexico," Working Papers 2017-18, Banco de México.

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