Bhanupong Nidhiprabha: More than 15 years ago, Eichengreen (2001) asked a question about what we can learn from cross-country studies of capital account liberalization when the empirical evidence was inconclusive. Since then, there have been significant changes in the view of capital account liberalization. The authors raise three important research questions: How do magnitudes, persistence, and volatility of various capital flows compare? How have they evolved over time? What are correlates of different flows?
The result from the investigation shows that pull factors affect FDI, which is the most stable component of capital flows. Push factors such as the federal funds rate affects portfolio flows, which are debt and equity flows. The portfolio flows are the most volatile component of capital flows. The last component of capital flows, the other flows, which are bank and trade credits, flow from government and central banks, and are determined by push...