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Determinants of the Financial Account of Costa Rica

Author

Listed:
  • Jorge León Murillo

    (Department of Economic Research, Central Bank of Costa Rica)

  • Marie Laura Meza-Peraza

    (Research Intern, Central Bank of Costa Rica)

Abstract

The purpose of this paper is to develop an econometric model with the main factors that determine the financial account of Costa Rica in order to better understand the behavior of capital flows and quantify the effect these factors have on this account. The results of most of the variables have the expected signs and a high level of statistical significance on the dependent variables: the financial account and classified as liabilities and assets. The difference between local and international interest rates indicated a high level of significance in both models; therefore, it is a relevant variable to explain the behavior of capital flows and a key indicator to take into account when forecasting futures flows of capital. ***Resumen: El objetivo de este documento es formular un modelo econométrico con los principales factores que determinan la cuenta financiera de Costa Rica con el fin de entender mejor el comportamiento de los flujos de capital y cuantificar el efecto que estos factores tienen sobre esta cuenta. Los resultados de la mayoría de las variables tienen los signos esperados y un alto nivel de significancia sobre las variables dependientes: la cuenta financiera y sus diferentes elementos clasificados en pasivos y activos. La diferencia entre las tasas de interés local e internacional indicó un alto nivel de significancia en ambos modelos evaluados, por tanto es una variable relevante para explicar el comportamiento de los flujos de capital y un indicador clave para predecir el comportamiento de los flujos de capital.

Suggested Citation

  • Jorge León Murillo & Marie Laura Meza-Peraza, 2019. "Determinants of the Financial Account of Costa Rica," Documentos de Trabajo 1901, Banco Central de Costa Rica.
    • Handle: RePEc:apk:doctra:1901
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    File URL: https://repositorioinvestigaciones.bccr.fi.cr/handle/20.500.12506/311
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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