The Role of Risk and Information for International Capital Flows

The Role of Risk and Information for International Capital Flows

New Evidence From the SDDS

eBook - 2012
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In this paper we investigate whether better information about the macroeconomic environment of an economy has a positive impact on its capital inflows, namely portfolio and foreign direct investment (FDI). The purpose of our study is to explicitly quantify information asymmetries by compliance with the IMF's Special Data Dissemination Standard (SDDS). For FDI, we find statistically significant and robust support for this hypothesis: SDDS subscription increased inflows by an economically relevant magnitude of about 60 percent. We also find evidence of aversion against political and macroeconomic risk as determinants of portfolio and FDI flows anduse a non-parametric test for spatial correlation in the residual of capital flows.
Publisher: Washington, DC : International Monetary Fund, 2012
ISBN: 9781475512656
1475512651
9781475512625
9781475511925
Characteristics: data file,rda
1 online resource (43 pages) : illustrations
Additional Contributors: Wacker, Konstantin M.

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