Modelling the determinants of capital flows and capital flight: With an application to South African data from 1960 to 1995

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Abstract

This paper examines the relative sensitivity of four alternative measures of capital flows or flight to their determinants. We find that all capital flow measures prove to be sensitive to a range of uncertainty measures, as well as to standard measures of the rate of return on assets. While there is evidence to suggest that one of the capital flight measures is more sensitive to risk measures than capital flows as reported in the balance of payments, this is not true of all flight measures. The policy implications in favour of a stable and transparent policy environment as a means of attracting capital flows is thus invariant between balance of payments and alternative capital flight measures.

Original languageEnglish (US)
Pages (from-to)419-444
Number of pages26
JournalEconomic Modelling
Volume19
Issue number3
DOIs
StatePublished - Mar 14 2002

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Africa
Modeling
Capital flight
Capital flows
Balance of payments
Policy implications
Rate of return
Risk measures
Return on assets
Uncertainty

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Cite this

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abstract = "This paper examines the relative sensitivity of four alternative measures of capital flows or flight to their determinants. We find that all capital flow measures prove to be sensitive to a range of uncertainty measures, as well as to standard measures of the rate of return on assets. While there is evidence to suggest that one of the capital flight measures is more sensitive to risk measures than capital flows as reported in the balance of payments, this is not true of all flight measures. The policy implications in favour of a stable and transparent policy environment as a means of attracting capital flows is thus invariant between balance of payments and alternative capital flight measures.",
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