Medium-Term Determinants of International Investment Positions: The Role of Structural Policies

Furceri, Davide; Guichard, Stéphanie; Rusticelli, Elena

doi:10.1142/s1793993312500123

Cited by 18 publications

(22 citation statements)

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“…Furceri et al (2011) find that growth supportive structural policies, while attracting more net inflows, can modify their composition towards sources of financing that are usually seen as more stable. For example, more competition-friendly product market regulation, less stringent job protection, higher institutional quality and greater capital account openness are associated with a larger component of foreign direct investment (FDI) inflows and a smaller share of debt.…”

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confidence: 92%

“…4 The paper also analyses whether the composition of inflows on FDI, equity portfolio or debt influences the effect of large capital inflow episodes. This is important to understand which type of flows are associated with the highest financial vulnerabilities, and is relevant from a policy point of view given that particular structural settings are likely to affect the composition of these flows (Furceri et al 2011).…”

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confidence: 99%

“…This is important from a policy point of view given that particular structural policy settings are likely to affect the composition of these flows (Furceri et al 2011). This means that reforms modifying the composition of capital flows toward a lower share of debt are likely to reduce vulnerabilities associated with the financial system.…”

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confidence: 99%

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Episodes of Large Capital Inflows and the Likelihood of Banking and Currency Crises and Sudden Stops

Furceri

Guichard

Rusticelli

2011

OECD Economics Department Working Papers

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JT03301984This paper provides an empirical investigation of the relationship between surges in capital inflows and the probability of subsequent banking, currency and balance-of-payment crises. Using a panel of developed and emerging economies from 1970 to 2007, it is shown that a large capital inflow episode increases substantially the probability of having a banking or a currency crisis in the two following years. The effect is especially large for the case of balance-of-payment crises. The paper also finds that the effect of large capital inflows is different depending on the type of flows characterising the episode. In particular, large capital inflows that are debt-driven significantly increase the probability of banking, currency and balance of payment crises, whereas if inflows are driven by equity portfolio investment or FDI there is a negligible effect. This means that structural reforms that modify the composition of capital flows towards a lower share of debt are likely to reduce the financial vulnerabilities to large capital inflows. At the same time, however, structural reforms may also increase the overall size of capital flows.JEL classification: E44; E51; F1; F34.

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Episodes of Large Capital Inflows and the Likelihood of Banking and Currency Crises and Sudden Stops

Furceri

Guichard

Rusticelli

2011

OECD Economics Department Working Papers

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“…To address this identification bias, the effect of one type of large capital inflow episode on the probability of a crisis is estimated only when there has not been an occurrence of a large capital inflow episode for the other types of capital inflow in the two years before, during or after. This is important for understanding which types of inflow are associated with the highest financial vulnerability, and is relevant from a policy point of view, given that particular structural settings are likely to affect the composition of these flows (Furceri et al ). While many of the previous studies in the literature have focused on emerging economies, our analysis is conducted for a large sample of emerging and developed economies from 1970 to 2007.…”

Section: Introductionmentioning

confidence: 99%

Episodes of Large Capital Inflows, Banking and Currency Crises, and Sudden Stops

Furceri

Guichard

Rusticelli

2012

International Finance

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This paper empirically investigates the relationship between surges in capital inflows and the probability of subsequent banking, currency and balance‐of‐payment crises. Using a panel of developed and emerging economies from 1970 to 2007, it shows that a large capital inflow episode increases substantially the probability of having a banking or a currency crisis in the two following years. The effect is especially large for the case of balance‐of‐payment crises. The paper also finds that the effect of large capital inflows is different depending on the type of flows characterizing the episode. In particular, large capital inflows that are debt driven significantly increase the probability of banking, currency and balance‐of‐payment crises, whereas inflows that are driven by equity portfolio investment or foreign direct investment have a negligible effect.

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“…The following variables are typically considered as the key drivers of capital flows into a certain economy (see inter alia Furceri et al 2011;Jevčák et al 2010;Fratzscher 2011 institutional factors (quality of the legal system, infrastructure etc).…”

Section: Motivation and Theoretical Considerationsmentioning

confidence: 99%

Measuring Institutional Competitiveness in Europe

Huemer¹,

Scheubel²,

Walch³

2013

CESifo Economic Studies

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. All rights reserved. Terms of use: Documents in ISSN 1725-2806 (online) EU Catalogue NoQB-AR-13-053-EN-N (online)Any reproduction, publication and reprint in the form of a different publication, whether printed or produced electronically, in whole or in part, is permitted only with the explicit written authorisation of the ECB or the authors. The refereeing process of this paper has been coordinated by Editorial Board of the ECB Working Paper Series, led by Philipp Hartmann.The paper is released in order to make the research of CompNet generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the ones of the author(s) and do not necessarily reflect those of the ECB, the ESCB, and of other organisations associated with the Network. AcknowledgementsThe views presented in this paper are those of the authors and do not necessarily reflect the views of the ECB. We thank Gilles Noblet (ECB), Jason Jones (Furman University) and the discussants at the joint CES-Ifo /University of Athens workshop on 23-24 September 2011 for helpful comments. We are particularly grateful to Alessio Terzi for valuable research assistance. Stefan HuemerEuropean Central Bank; e-mail: stefan.huemer@ecb.europa.eu Beatrice ScheubelEuropean Central Bank; e-mail: beatrice.scheubel@ecb.europa.eu Florian WalchEuropean Central Bank; e-mail: florian.walch@ecb.europa.eu 1 ABSTRACTWhile there are many methods to measure the competitiveness of an economy, most of these concepts ignore the fact that competitiveness can change because of market processes like wage negotiation but also because of political decision-making. Governments that compete with others for factors of production face the incentive to adjust key policy variables to improve their competitive position. Disentangling market-induced and politics-induced changes in competitiveness is not easy, but strongly warranted given current discussions that some EMU Member States should improve their competitive position within the euro area by adjusting policy variables. Increasing country competitiveness is one of the key objectives currently discussed by policy makers in the context of creating an economic union in the euro area, to complement monetary union. We propose a new competitiveness index that captures the dimensions in which politics can influence competitiveness beyond factor price adjustments.Our index shows that the individual components of i...

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Medium-Term Determinants of International Investment Positions: The Role of Structural Policies

Cited by 18 publications

References 36 publications

Episodes of Large Capital Inflows and the Likelihood of Banking and Currency Crises and Sudden Stops

Episodes of Large Capital Inflows and the Likelihood of Banking and Currency Crises and Sudden Stops

Episodes of Large Capital Inflows, Banking and Currency Crises, and Sudden Stops

Measuring Institutional Competitiveness in Europe

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