Capital flow deflection

Giordani, Paolo; Ruta, Michele; Weisfeld, Hans; Zhu, Ling

doi:10.1016/j.jinteco.2016.12.007

Cited by 39 publications

(27 citation statements)

References 15 publications

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“…We find significant deflection effects up to 3 quarters after the introduction of controls. This result provides evidence of the so-called deflection effect and it corroborates similar empirical evidence found in the literature (K. Forbes et al, 2016;Giordani et al, 2017).…”

Section: Datasupporting

confidence: 91%

“…The concept of similarity can span over different dimensions; one possible option is to group countries on the basis of geographical proximity , or on the basis of common economic characteristics, for example defining J to only include EMEs. Alternatively, the set J can be defined on the basis of similarity in some selected macroeconomic fundamentals, or on the basis of a similar country risk profile (Giordani et al, 2017).…”

Section: Baseline Specificationmentioning

confidence: 99%

“…Forbes et al (2016) and Lambert et al (2011) study the case of the Brazilian tax on inflow financial transactions (IOF) and provide evidence of significant and economically relevant reallocation of portfolio investment to other countries. Using panel data, Giordani et al (2017) and find evidence that capital controls deflect capital flows to other receiving countries sharing similar 1 Filippo Gori is an Economist in the OECD Economics Department; Etienne Lepers is an Economist in the OECD Directorate for Financial and Enterprise Affairs and Caroline Mehigan is a Senior Economist in the Central Bank of Ireland. The authors would like to thank Winfrid Blaschke, Annamaria De Crescenzio, Luiz De Mello, Alessandro Maravalle, Letizia Montinari, Ana Novik, Pierre Guérin and Lukasz Rawdanowicz, as well as participants of the CEREC annual conference on Financial Integration and seminars at the OECD for their valuable comments.…”

Section: Introductionmentioning

confidence: 99%

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Capital flow deflection under the magnifying glass

Gori¹,

Lepers²,

Mehigan³

2020

OECD Economics Department Working Papers

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This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 2 | ECO/WKP(2020)21 CAPITAL FLOW DEFLECTION UNDER THE MAGNIFYING GLASS Unclassified OECD Working Papers should not be reported as representing the official views of the OECD or of its member countries. The opinions expressed and arguments employed are those of the author(s). Working Papers describe preliminary results or research in progress by the author(s) and are published to stimulate discussion on a broad range of issues on which the OECD works.

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Section: Datasupporting

confidence: 91%

Section: Baseline Specificationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Capital flow deflection under the magnifying glass

Gori¹,

Lepers²,

Mehigan³

2020

OECD Economics Department Working Papers

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“…Recent efforts have highlighted geographic and asset spillovers from capital controls. From a lender/investor perspective, investors reallocate lending and investment portfolios to countries that are economically similar or to neighbouring economies (Forbes et al, 2016;Giordani et al, 2017;Gori et al, 2020;Pasricha et al, 2018). But from a domestic perspective, there may also be asset spillovers whereby controls on specific transactions may lead to the build-up of vulnerabilities through other transactions not covered by the control.…”

Section: Results Sensitivity Tests and Extensionsmentioning

confidence: 99%

Sectoral Capital Flows: Covariates, Co-movements, and Controls

Lepers

Mercado

2020

SSRN Journal

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This paper assembles a comprehensive sectoral capital flows dataset for 64 advanced and emerging economies from 2000-18, including direct, portfolio, and other investment to and from five sectors: namely, central banks (CB), general government (GG), banks (BKs), non-financial corporates (NFCs) and other financial corporates (OFCs). Using this data, the paper highlights the usefulness of a sectoral approach in assessing capital flow covariates, co-movements, and the effectiveness of capital controls. We show that 1) sectoral flows have varying sensitivities to measures of the global financial cycle and different cyclicality with respect to output growth; 2) co-movements in intra-sectoral resident and non-resident and co-movements with OFC sectoral flows explain a large part of the observed positive correlation between gross inflows and outflows; and, 3) sectorspecific tightening capital control measures appear effective in reducing the volume of flows to NFCs and OFCs.

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“…Large dispersion across countries, little variation over time. Figure 1 shows, for the four different financial openness indices considered, the evolution of the median and 15 A similar approach to develop a financial openness index is taken in a recent paper by Giordani et al (2017).…”

Section: Three Stylized Facts About Financial Openness Indicesmentioning

confidence: 99%