Working Paper: NBER ID: w30453
Authors: John D. Burger; Francis E. Warnock; Veronica Cacdac Warnock
Abstract: Latin American portfolio inflows show a strong tendency to revert to a natural level, KF*, over medium-run horizons. Deviations of actual flows from KF* provide policymakers with a real-time predictor of future flows, sudden stops and vulnerability to global shocks. Analysis of short-run deviations of flows from KF* reveals heterogeneous drivers: commodity prices for Brazil, Chile, and Mexico; risk tolerance for Argentina, Costa Rica, and Peru.
Keywords: No keywords provided
JEL Codes: F3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Latin American portfolio inflows (N26) | kf (L68) |
| kf (L68) | Latin American portfolio inflows (N26) |
| deviations from kf (C22) | future changes in portfolio flows (F32) |
| kf (L68) | vulnerability to global shocks (F65) |
| positive kf gap (F61) | likelihood of sudden stops (E32) |
| commodity prices (Q02) | flows to Brazil, Chile, and Mexico (F29) |
| global risk tolerance (D81) | flows to Argentina, Costa Rica, and Peru (O54) |