Exchange rate regimes as thresholds: The main determinants of capital inflows in emerging market economies

ÖZMEN E., Taşdemir F.

Borsa Istanbul Review, cilt.23, sa.6, ss.1282-1288, 2023 (SSCI) identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 23 Sayı: 6
  • Basım Tarihi: 2023
  • Doi Numarası: 10.1016/j.bir.2023.08.003
  • Dergi Adı: Borsa Istanbul Review
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus, EconLit, Directory of Open Access Journals
  • Sayfa Sayıları: ss.1282-1288
  • Anahtar Kelimeler: Capital inflows, Emerging market economies, Exchange rate regimes, Global financial conditions, Panel threshold model
  • Orta Doğu Teknik Üniversitesi Adresli: Evet

Özet

We investigate whether the impacts of the main push (global financial conditions, GFC) and pull (growth) factors on capital inflows are invariant to endogenously estimated thresholds for exchange rate regimes (ERRs) in emerging market economies. The impact of GFC is higher under more flexible ERRs for aggregate capital and portfolio inflows. FDI inflows are determined by growth. The sensitivity of aggregate and other investment inflows to growth is higher under more rigid ERRs. Our results also suggest that managed ERRs encourage capital inflows by allowing countries to import the monetary policy credibility of the anchored country and to provide an exchange rate guarantee.