The Role of Asymmetry and Uncertainties in the Capital Flows- Economic Growth Nexus

European Xtramile Centre of African Studies WP/19/047

22 Pages Posted: 26 Aug 2019

See all articles by Ibrahim Raheem

Ibrahim Raheem

University of Kent - Department of Economics

Sara le Roux

Oxford Brookes University - Department of Economics

Simplice Asongu

African Governance and Development Institute

Date Written: August 23, 2019

Abstract

This study examines the asymmetry between capital flows and economic growth in 42 countries for the period 1990-2017. It further argues that uncertainty is an important channel through which asymmetry operates. As such, the three measures of uncertainty are macroeconomic, fiscal and institutional. The Generalised Method of Moments is used as an empirical strategy. The existence of an asymmetry is confirmed by the findings as capital flows are more reactive to economic drag when compared to economic growth. Furthermore, the channels through which asymmetry operate are heterogeneous to measures of capital flows and proxies for uncertainty.

Keywords: Capital flows, Economic growth, Asymmetry, Uncertainty and Emerging countries

JEL Classification: C13; F3, G15; O16

Suggested Citation

Raheem, Ibrahim and le Roux, Sara and Asongu, Simplice, The Role of Asymmetry and Uncertainties in the Capital Flows- Economic Growth Nexus (August 23, 2019). European Xtramile Centre of African Studies WP/19/047, Available at SSRN: https://ssrn.com/abstract=3441669 or http://dx.doi.org/10.2139/ssrn.3441669

Ibrahim Raheem

University of Kent - Department of Economics ( email )

Keynes College
Kent, CT2 7NP
United Kingdom

Sara Le Roux

Oxford Brookes University - Department of Economics ( email )

Oxford Brookes Business School
Headington Campus
Oxford, OX3 0BP
United Kingdom

HOME PAGE: http://saraleroux.weebly.com/

Simplice Asongu (Contact Author)

African Governance and Development Institute ( email )

P.O. Box 8413
Yaoundé, 8413
Cameroon

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