Working Paper: NBER ID: w13194
Authors: Ana Fostel; Graciela Laura Kaminsky
Abstract: This paper examines Latin America's access to international capital markets from 1980 to 2005, with particular attention to the role of domestic and external factors. To capture access to international markets, we use primary gross issuance in international bond, equity, and syndicated-loan markets. Using panel estimation, we find that sound fundamentals matter. For example, Argentina, Brazil, and Chile's superb performance in capital markets during the early 1990s has been in large part driven by better fundamentals. However, the upsurge in international lending to Latin America starting in 2003 has been mainly driven by a dramatic increase in global liquidity.
Keywords: Latin America; International Capital Markets; Global Liquidity; Domestic Fundamentals
JEL Codes: F3; F30; F32; F34; F36
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| global liquidity (F65) | resurgence in international lending to Latin America (F34) |
| better domestic fundamentals (P17) | favorable access to international capital markets (F30) |
| interaction between domestic political risk and global liquidity (F65) | issuance (G24) |
| major external crises (H12) | capital flows (F32) |