“…On the other hand, they can exacerbate certain vulnerabilities, such as amplified business cycles, financial and macroeconomic instability, and banking, sovereign, or currency crises. Indeed, previous literature shows that large swings in international capital flows can have considerable effects on various macroeconomic and financial indicators, such as inflation, asset prices, credit growth, and output (CALVO, 1998;REINHART and REINHART, 2008;CARDARELLI, ELEKDAG, and KOSE, 2010;FURCERI, GUICHARD, and RUSTICELLI, 2012;TILLMANN, 2013). This finding holds for both advanced and emerging market economies.…”