Capital flows:

منو

" Capital flows: "
Aizenman, Joshua; Sushko, Vladyslav

Document Type	:	AL
Record Number	:	911274
Doc. No	:	LA79f5144f
Title & Author	:	Capital flows:. Catalyst or Hindrance to economic takeoffs? [Article]\ Aizenman, Joshua; Sushko, Vladyslav
Date	:	2011
Title of Periodical	:	UC Santa Cruz
Abstract	:	This paper applies a probit estimation to assess the relationship between economic takeoffs during 1950-2000 and inflows of portfolio debt, portfolio equity, and FDI, controlling for country’s stock of short-termexternal debt and commodity terms of trade. Average level of FDI inflows is associated with a 23 percenthigher takeoff probability relative to a zero FDI inflow benchmark, and this effect is highest for the LatinAmerica subsample, with a 65 rise in takeoff probability. Higher stock of short term external debt hasbeen associated with a substantial negative effect on the probability of a takeoff, and the effect of theshort terms debt overhang is largest for Latin American countries. Yet, virtually all the takeoffs wereassociated with a rise in portfolio debt inflows. At the sample mean, inflow of portfolio debt is associatedwith approximately 25 percent higher probability of a takeoff. In contrast, a one standard deviationincrease in equity outflows (inflows) is associated with a 47 percent (17 percent) decline in the probabilityof a takeoff. A one standard deviation improvement in commodity terms of trade is associated with 28percent higher takeoff probability.