Modelling fundamentals for forecasting capital flows to emerging markets

Ashoka Mody, Mark P. Taylor, Jung Yeon Kim

Research output: Contribution to journalArticlepeer-review

46 Scopus citations


In this paper, we provide capital flow forecasts to 32 developing countries using a error correction framework based on underlying domestic (pull) fundamentals and international (push) factors. In general, pull factors have a heavier weight in determining these capital flows. However, short-term dynamics of capital flows can be significantly influenced by external developments. Simulations under various economic scenarios show that while financial variables (such as the US interest rate and high-yield spread) are important, real US activity may be even more potent in influencing capital flow movements.

Original languageEnglish (US)
Pages (from-to)201-216
Number of pages16
JournalInternational Journal of Finance and Economics
Issue number3
StatePublished - 2001
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics


  • Capital flows
  • Economic fundamentals
  • Vector autoregression


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