Proceedings of the New York State Economics Association


Capital Flows to Russia, Ukraine, and Belarus: Does "Hot" Money Respond Differently to Macroeconomic Shocks?

Scott W. Hegerty

vol. 3, September 2010, p. 38-48


Capital flows into the former Soviet bloc have increased tremendously since the mid-1990s. This study applies the structural VAR model of Ying and Kim (2001) to investigate the macroeconomic "push" and "pull" factors behind net flows of FDI, portfolio, and other investment into Russia, Ukraine and Belarus. Impulse-response and variance decomposition analysis shows that domestic income and monetary shocks, as well as foreign income and interest-rate shocks, have effects that vary by flow and by country. Russian FDI and portfolio investment show significant, but different, responses to income and foreign interest-rate shocks. In addition, Belarus responds to improved macroeconomic fundamentals.


suggested citation:

Scott W. Hegerty. "Capital Flows to Russia, Ukraine, and Belarus: Does 'Hot' Money Respond Differently to Macroeconomic Shocks?." Proceedings of the New York State Economics Association. vol. 3, September 2010, p. 38-48

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