Fueling or Following Growth? Causal Effects of Capital Inflows on Recipient Economies
IMF Working Papers, January 19, 2024
Source details
- Canonical URL
- Fueling or Following Growth? Causal Effects of Capital Inflows on Recipient Economies
Other formats
Bibliographic details
- Authors: Nicolas End
- Published: January 19, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400265426.001
Overview and research question
- Identifying the causal impact of capital inflows on growth and development is described as a perennial challenge.
- The paper proposes a new empirical approach for recipient emerging and developing economies:
- Uses shift-share instruments.
- Corrects for indirect flows.
Key findings
- The paper finds a significantly beneficial effect of loan and bond inflows on economic performance.
- The beneficial effect "materializes after a few years."
- There is some confirmation that the absorptive capacity of recipient economies depends on their fundamentals.
Methodology and scope
- Empirical strategy: shift-share instruments with correction for indirect flows.
- Recipient focus: emerging and developing economies.
- Subject areas listed: Balance of payments, Capital flows, Capital inflows, Foreign direct investment, Institutional View on capital flows, Portfolio investment.
Keywords and topical coverage
- bond portfolio inflow
- Capital flows
- Capital inflows
- economic growth
- equity portfolio inflow
- Foreign direct investment
- Global
- inflow effect
- Institutional View on capital flows
- investment inflow
- Portfolio investment
- recipient emerging economy
- shift-share instrument
Content in this bundle
- Working Paper