International Finance Discussion Papers (IFDP)
January 2002
Determinants and Repercussions of the Composition of Capital Inflows
Mark Carlson and Leonardo Hernandez
Abstract:
The Mexican, Asian, and Russian crises of the mid- and late 1990s have renewed the interest among policymakers in the determinants and effects of private capital flows. This paper analyzes whether policies can affect the composition of capital inflows and whether different compositions aggravate crises. We find that, while fundamentals matter, capital controls can affect the mix of capital inflows that countries receive. We find that during the Asian crisis countries with more Yen denominated debt faired worse, while during the Mexican crisis larger short-term debt stocks increased the severity of the crisis.
Keywords: Capital flows, crisis, contagion
PDF: Full Paper
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