Should-Read: Barry Eichengreen et al.: On the fickleness of capital flows: "According to conventional wisdom, capital flows are fickle...

...Focusing on emerging markets, this column argues that despite recent structural and regulatory changes, much of this wisdom still holds today. Foreign direct investment inflows are more stable than non-FDI inflows. Within non-FDI inflows, portfolio debt and bank-intermediated flows are most volatile. Meanwhile, FDI and bank-related outflows from emerging markets have grown and become increasingly volatile. This finding underscores the need for greater attention from analysts and policymakers to the capital outflow side.

B Eichengreen and P Gupta (2016), “Managing Sudden Stops,” World Bank Policy Research Paper 7639.

B Eichengreen, P Gupta, and O Masetti (2017), “Are Capital Flows Fickle? Increasingly? And Does the Answer Still Depend on Type?” World Bank Policy Research Paper, 7972.