Based on GSADF model - To study the impact of surging cross-border capital flows and their internal structure on economic growth
DOI:
https://doi.org/10.54097/hbem.v18i.12792Keywords:
capital flow surges, economic growth, heterogeneity.Abstract
This paper measures surges using the Generalized Supremum Augmented Dickey-Fuller (GSADF) model based on capital flows data for 64 economies from 2003:Q1 to 2020:Q4. Then, this paper examines the impact of surges and the internal structure (abnormal liability flows and abnormal asset flows) on economic growth in the recipient economy, and further investigate the heterogeneity among economies with different levels of economic development. This paper finds that surges can positively contribute to economic growth in the recipient economy. In terms of the internal structure of surges, overall, abnormal liability flows have a significant positive effect on economic growth, while abnormal asset flows have no significant effect. Emerging economies perform in line with the overall, while economic growth in developed economies is positively boosted by both abnormal liability flows and abnormal asset flows together. Our research has important reference value for China to prevent risks of surges and their inherent structural changes.
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