CIAO DATE: 04/2015
March 2015
Centre for International Governance Innovation
This paper shows that debt flows have contractionary effects on emerging markets’ output, while equity flows have expansionary effects. Such correlations can be driven by counter-cyclical debt flows and pro-cyclical equity flows, or by debt flows that lead to an appreciation and hurt exports, and by equity flows that improve the productivity of the real economy, broadly defined.
Resource link: Capital Flows and Spillovers [PDF] - 718K