Working Paper: NBER ID: w11696
Authors: Laura Alfaro; Sebnem Kalemli-Ozcan; Vadym Volosovych
Abstract: We describe the patterns of international capital flows in the period 1970 - 2000. We then examine the determinants of capital flows and capital flows volatility during this period. We find that institutional quality is an important determinant of capital flows. Historical determinants of current legal institutions have a direct effect on foreign investments. Policy plays a significant role in explaining the changes in the level of capital flows over time and their volatility.
Keywords: No keywords provided
JEL Codes: F21; F41; O1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| institutional quality (L15) | capital inflows (F21) |
| historical legal origins (B15) | capital inflows (F21) |
| historical legal origins (B15) | institutional quality (L15) |
| changes in institutional quality (O17) | variations in capital inflows (F32) |
| poor monetary policies (E49) | long-run volatility of capital flows (F32) |
| low institutional quality (O17) | long-run volatility of capital flows (F32) |
| improvements in institutions (O43) | foreign investment (F21) |
| domestic policies (H59) | capital inflows (F21) |