Volatile Capital Flows and Economic Growth: The Role of Macro-prudential Regulation
This study examines the links among macroprudential regulation, the volatility of financial flows, and economic growth
Abstract
In this paper, the authors examine the links among macroprudential regulation, the volatility of financial flows, and economic growth. In particular, we explore whether macroprudential regulation mitigates the adverse effects of capital flows volatility on economic growth. Using cross-country data for the period 1973-2013, we find that macroprudential regulation promotes economic growth by reducing the negative impact of volatile capital flows. The findings hold for both aggregate capital flows and their various components, while they are also robust for various indicators of macroprudential policies. The results support the argument that macroprudential policy rules designed to ensure financial stability are beneficial to long-run economic growth.
These outputs are part of the 鈥楩inancial Volatility, Macroprudential Regulation and Economic Growth in Low-Income Countries鈥� project.
Citation
Kyriakos C. Neanidis (2015) Volatile Capital Flows and Economic Growth. University of Manchester Centre for Growth and Business Cycle Research, Economic Studies Discussion paper 215
Neanidis, K.C. (2016) Volatile Capital Flows and Economic Growth: The Role of Macro-prudential Regulation (Summary column). Fondation pour les 茅tudes et recherches sur le d茅veloppement international (FERDI) policy brief B146 April 2016
Links
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