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Title:Capital flows and economic growth in the era of financial integration and crisis: 1990 - 2010 PDF Logo
Authors:Aizenman, Joshua
Jinjarak, Yothin
Park, Donghyun
Issue Date:2011
Series/Report no.:Working Papers, UC Santa Cruz Economics Department 692
Abstract:We investigate the relationship between economic growth and lagged international capital flows, disaggregated into FDI, portfolio investment, equity investment, and shortterm debt. We follow about 100 countries during 1990-2010 when emerging markets became more integrated into the international financial system. We look at the relationship both before and after the global crisis. Our study reveals a complex and mixed picture. The relationship between growth and lagged capital flows depends on the type of flows, economic structure, and global growth patterns. We find a large and robust relationship between FDI - both inflows and outflows - and growth. The relationship between growth and equity flows is smaller and less stable. Finally, the relationship between growth and short-term debt is nil before the crisis, and negative during the crisis.
Subjects:capital flows
economic growth
FDI
portfolio investment
equity investment
short-term debt
financial integration
financial crisis
JEL:F43
F21
F32
Document Type:Working Paper
Appears in Collections:Working Papers, Economics Department, UC Santa Cruz

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