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Domestic Credit Growth and International Capital Flows

Listed author(s):
  • Philip Lane

    ()

    (Trinity College Dublin)

  • Peter McQuade

    ()

    (European Central Bank)

Europe experienced substantial cross-country variation in domestic credit growth and cross-border capital flows during the pre-crisis period. We investigate the inter-relations between domestic credit growth and international capital flows over 1993-2008, with a special focus on the 2003-2008 boom period. We establish that domestic credit growth in European countries is strongly related to net debt inflows but not to net equity inflows. This pattern also holds for an extended sample of 54 advanced and emerging economies.

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File URL: http://www.tcd.ie/iiis/documents/discussion/pdfs/iiisdp428.pdf
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Paper provided by IIIS in its series The Institute for International Integration Studies Discussion Paper Series with number iiisdp428.

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Length: 65 pages
Date of creation: May 2013
Handle: RePEc:iis:dispap:iiisdp428
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  14. Jordà, Òscar & Schularick, Moritz & Taylor, Alan M., 2011. "When Credit Bites Back: Leverage, Business Cycles, and Crises," CEPR Discussion Papers 8678, C.E.P.R. Discussion Papers.
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  25. Jack Favilukis & David Kohn & Sydney C. Ludvigson & Stijn Van Nieuwerburgh, 2012. "International Capital Flows and House Prices: Theory and Evidence," NBER Chapters,in: Housing and the Financial Crisis, pages 235-299 National Bureau of Economic Research, Inc.
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