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Volatility in International Capital Movements

Author

Listed:
  • Chris Becker

    (Reserve Bank of Australia)

  • Clare Noone

    (Reserve Bank of Australia)

Abstract

Conventional wisdom is that some capital flows are inherently more volatile than others. However, our investigation of the statistical properties of these flows shows that no regular relationships exist to suggest that the particular composition of capital flows can help to explain the overall stability of the external accounts. Instead, capital seems to come and go in different forms with few reliable patterns. We show that while industrialised economies have experienced a trend rise in the volatility of individual components in the capital account, this variability is largely offsetting. Such offsetting relationships appear less prevalent in emerging economies.

Suggested Citation

  • Chris Becker & Clare Noone, 2009. "Volatility in International Capital Movements," RBA Research Discussion Papers rdp2009-09, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp2009-09
    as

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    File URL: https://www.rba.gov.au/publications/rdp/2009/pdf/rdp2009-09.pdf
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    Cited by:

    1. Aiba, Daiju, 2023. "Bank dependency on foreign funding and global liquidity shocks: The importance of US monetary policy for a developing country," Journal of Asian Economics, Elsevier, vol. 84(C).

    More about this item

    Keywords

    capital flows; volatility; financial globalisation;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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