The Relationship between Capital Flows and Current Account: Volatility and Causality

Guerin, Selen Sarisoy

doi:10.2139/ssrn.2018195

Cited by 14 publications

(5 citation statements)

References 28 publications

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“…Fry et al (1995) found evidence of KA causing CA imbalances in Argentina, Brazil and Venezuela for the period from 1970 to 1992. Guerin (2012) studied the relationship between net capital flows and CA in a set of industrialised and developing countries. He found that there was evidence of causality running from net inflows to the CA imbalance only in Iceland among industrial countries.…”

Section: Literature Reviewmentioning

confidence: 99%

Current and Capital Account Dynamics in India: An Empirical Analysis of the Post-Reform Period

Khan

2021

Foreign Trade Review

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This article analyses the dynamics between current account (CA) and capital account in post-liberalisation India. Contemporaneous occurrence of CA deficit along with capital account surplus suggests the possible causal relationship between the two accounts. The theoretical debate around capital account liberalisation (KAL) is developed with the intention to lend support to empirical results for policy formulation. The analysis of arguments for and against KAL liberates us in interpreting the empirical results. Within the framework of KAL, this article proceeds to estimate the relationship between current and capital account. A set of econometric tests are performed on an Indian quarterly data over the period from 1996 to 2018. Econometric analysis reveals that capital account affects CA negatively. Short-run capital and debt flow also affect CA negatively, while foreign direct investment (FDI) affects it positively. We find debt flow to be an important factor, contributing to CA imbalance. Such dynamics is critical for any decision about KAL. From the analysis, it is observed that India needs to encourage FDI, while maintaining strict control over short-term capital, which is highly disruptive, and proceed cautiously towards full KAL. JEL Codes: C32, F21, F32

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Section: Literature Reviewmentioning

confidence: 99%

Current and Capital Account Dynamics in India: An Empirical Analysis of the Post-Reform Period

Khan

2021

Foreign Trade Review

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“…On the other hand, some scholars have questioned the role of FDI in the host country's economy. A study by [22] argued that the deterioration of external imbalances is one of the unfavourable effects of FDI inflows in developing countries. Other researchers such as [23,24] postulated that the damaging and undesirable effects of FDI may be worsened if the technology transferred is inappropriate for developing countries and if FDI crowds out local investors.…”

Section: Literature Reviewmentioning

confidence: 99%

An Analysis of Drivers of International Investment Decisions in South Africa

Mongale¹,

Baloyi²

2020

Perspectives on Economic Development - Public Policy, Culture, and Economic Development

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The study investigated the drivers of international investment decisions in South Africa. As part of its investment drive, the government has embarked on a series of activities to lure investors. That been the case it appears that most of the empirical studies focused mainly on the relationship between investment and economic growth, hence very little seems to be known about the empirical evidence of other drivers of international investment decisions and their impact on the South African economy. The findings are envisaged to provide information and to add policy formulation to attract the much needed foreign investment. The autoregressive distribution lag approach was chosen to analyse the long and the short run relationships amongst the variables of interest and Granger Causality analysis was also employed to determine causal relationships between dependent variable and its regressors. The results indicated that a stronger statistical and economic basis for empirical error correction model was established by the presence of cointegration amongst the variables and all the regressors were found to have a positive effect in the stock of foreign direct investment. Empirical findings suggest that government should ensure stable macroeconomic policies and labour disputes that result into prolonged strike actions must be minimised.

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“…Cari işlemler hesabı ile finans hesabı arasındaki ilişkiyi inceleyen bazı çalışmalarda (Yan, 2005;Yan, 2007;Yan and Yang, 2008;Guerin, 2003) incelemiştir. Analiz sonucunda, net sermaye girişlerinin GOÜ'lerde cari hesap dengesizliğine neden olurken, sanayileşmiş ülkelerde ise net sermaye girişlerinin cari hesap dengesizliğine neden olmadığı tespit edilmiştir.…”

Section: Ampi̇ri̇k Li̇teratürunclassified

Türkiye de Cari İşlemler Hesabı ile Finans Hesabı Arasındaki Nedensellik İlişkisi

Keskin¹

2019

ije

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Ampirik bulgular, finans hesabından cari işlemler hesabına doğru tek yönlü bir nedensellik ilişkisi olduğunu ortaya koymaktadır. Finans hesabının bileşenleri ile cari işlemler hesabı arasındaki nedensellik ilişkisine bakıldığında ise bulgular farklılaşmakta; finans hesabını oluşturan sermaye akımlarından portföy yatırımları ile kısa vadeli sermaye akımlarından cari işlemler hesabına doğru tek yönlü bir nedensellik ilişkisi mevcutken, cari işlemler hesabından doğrudan yatırımlar ile diğer uzun vadeli sermaye akımlarına doğru ise tek yönlü bir nedensellik ilişkisi olduğu tespit edilmiştir.

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The Relationship between Capital Flows and Current Account: Volatility and Causality

Cited by 14 publications

References 28 publications

Current and Capital Account Dynamics in India: An Empirical Analysis of the Post-Reform Period

Current and Capital Account Dynamics in India: An Empirical Analysis of the Post-Reform Period

An Analysis of Drivers of International Investment Decisions in South Africa

Türkiye de Cari İşlemler Hesabı ile Finans Hesabı Arasındaki Nedensellik İlişkisi

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