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Global Economic Divergence and Portfolio Capital Flows to Emerging Markets
Author(s) -
MANDALINCI ZEYYAD,
MUMTAZ HAROON
Publication year - 2019
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/jmcb.12576
Subject(s) - portfolio , emerging markets , divergence (linguistics) , economics , business cycle , capital flows , capital (architecture) , monetary economics , monetary policy , economic geography , financial economics , macroeconomics , market economy , geography , liberalization , linguistics , philosophy , archaeology
This paper studies the role of global and regional variations in economic activity and policy in developed world in driving portfolio capital flows (PCFs) to emerging markets (EMs). Results suggest that PCFs to EMs depend mainly on economic activity at the global level and monetary policy in America and Asia, positively on the former and negatively on the latters. PCFs are procyclical with respect to global activity, but countercyclical to regional activity. In aggregate, regional variations contribute more than global variations. This implies that economic divergence in the developed world can have significant effects on EMs via PCFs.