Analysis of the impact of global uncertainty on abnormal cross-border capital flows

Chuang Deng, Jingxuan Xie and Xiuyi Zhao

International Review of Economics & Finance, 2023, vol. 87, issue C, 338-346

Abstract: This paper econometrically analyzes the effects of policy and financial uncertainty on abnormal cross-border capital flows with the panel probit model, further exploring the drivers of abnormal cross-border capital flows and their heterogeneity across economies. Results reveal that the occurrence of abnormal cross-border capital flows is clustered during periods of high uncertainty. Rising financial uncertainty significantly increases the probability of capital stops and retrenchments, whereas policy uncertainty does not have a positive impact on them. Abnormal cross-border capital flows in developed economies are more evenly driven by uncertainty, international and domestic factors than those in emerging economies, which are mainly affected by uncertainty.

Keywords: Financial uncertainty; Economic policy uncertainty; Abnormal cross-border capital flows; Emerging economies; Developed economies (search for similar items in EconPapers)
JEL-codes: F32 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:87:y:2023:i:c:p:338-346

DOI: 10.1016/j.iref.2023.05.002

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