The Impact of Sudden Stops in Capital Flows on Output and Investment: Selected Emerging Markets

Emara, Noha; Ni, Congcong; Gao, Ya

The Impact of Sudden Stops in Capital Flows on Output and Investment: Selected Emerging Markets

Emara, Noha, Ni Congcong and Gao, Ya (2018). The impact of sudden stops in capital flows on output and investment: Selected emerging markets, 2018, with Ni, C., and Gao, Y., Turkish Economic Review, 5(4), 328-337.

10 Pages Posted: 14 Apr 2021

See all articles by Noha Emara

Noha Emara

Rutgers University

Congcong Ni

Ministry of Foreign Affairs of China

Ya Gao

Columbia University

Date Written: December 30, 2018

Abstract

We evaluate how vulnerable the emerging markets are to sudden stops, that is, capital inflow reversals, using panel data for 12 emerging economies for the period 1976-2002 that experienced such reversals. We investigate the impact of sudden stops on the macroeconomic indicators of economic growth and investment by employing the Generalized Method of Moments (GMM) estimation methodology. A robustness check is performed using regional groups and introducing additional control variables. We find that sudden stops have lagging, negative, and robust effect on output and investment, while the effect on investment is not always robusth.

Keywords: Sudden stops, Economic growth, Capital flows, Emerging markets, GMM.

JEL Classification: E40, F32, F36, G15

Suggested Citation: Suggested Citation

Emara, Noha and Ni, Congcong and Gao, Ya, The Impact of Sudden Stops in Capital Flows on Output and Investment: Selected Emerging Markets (December 30, 2018). Emara, Noha, Ni Congcong and Gao, Ya (2018). The impact of sudden stops in capital flows on output and investment: Selected emerging markets, 2018, with Ni, C., and Gao, Y., Turkish Economic Review, 5(4), 328-337. , Available at SSRN: https://ssrn.com/abstract=3813611