The Relationship Between Exchange Rate Regimes And Capital Inflows In Developing Countries.

摘要

The surge of capital inflows from advanced economies to emerging markets has triggered ongoing discussions of the determinants of this phenomenon. One major focus of academic interest is a country's exchange rate regime. This paper investigates the relationship between exchange rate regimes and capital flows to 41 developing countries from 2000 to 2010. I hypothesize that, all else equal, a fixed exchange rate is associated with moderately larger volumes of capital inflows, compared with a flexible exchange rate. However, using annual country-level data and a fixed effects model, I find no statistically significant relationship between exchange rate regimes and capital inflows in developing countries. Possible reasons for this result include omitted variable bias and insufficient data, and I suggest that future research focuses on these limitations.