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Effect of Policies on Capital Flows to Emerging Markets: Evidence from a Detailed Data Set

Author

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  • Chayawadee Chai-anant

    (Bank of Thailand)

Abstract

This study constructs a detailed data set of capital flow policies to estimate their effectiveness in 14 emerging markets. The components of quarterly capital flows are used to test the sensitivity of capital flows to push and pull factors as well as liberalization and control policies. The results reveal that capital inflows are sensitive to external and domestic factors, while there is little evidence of policy effectiveness on the volume of capital flows. However, the composition of capital flows is significantly sensitive to policy implementation. The share of foreign direct investment is the most sensitive item, contradiction the previous findings that portfolio share significantly react to capital controls. The conflicting results are possibly explained by the subjectively of policy categorization and difference in the frequency of data in the estimation. The robustness check suggests that the flow in the two regions; Latin American and Asia behave differently, in which the Latin American results largely mimic the full sample estimation.

Suggested Citation

  • Chayawadee Chai-anant, 2003. "Effect of Policies on Capital Flows to Emerging Markets: Evidence from a Detailed Data Set," Working Papers 2003-07, Monetary Policy Group, Bank of Thailand.
    • Handle: RePEc:bth:wpaper:2003-07
    as

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    References listed on IDEAS

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