An empirical analysis on capital flows: The case of Korea and Mexico

Yung Hsiang Ying, Yoonbai Kim

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30 Citations (Scopus)

Abstract

This paper discusses causes of capital flows in Korea and Mexico. Both countries received substantial amounts of foreign capital in the late 1980s and early 1990s. International capital helped these countries achieve a higher standard of living and faster economic growth. However, undesirable macroeconomic effects such as appreciation of real exchange rate and widening current account deficits usually accompany foreign capital inflows. The vector autoregressive (VAR) method is applied to investigate the underlying shocks causing the capital inflows. The main findings are that the U.S. business cycle and shocks to foreign interest rates account for more than 50% of capital inflows to both countries in the past two decades.

Original languageEnglish
Pages (from-to)954-968
Number of pages15
JournalSouthern Economic Journal
Volume67
Issue number4
DOIs
Publication statusPublished - 2001 Apr

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ASJC Scopus subject areas

  • Economics and Econometrics

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