Exploring the Dynamic Effects of Equity-Based Capital Inflows in BRINCS countries
Mustapha A. Akinkunmi
This study investigates whether equity-based capital inflows have influences on short-run macroeconomic variables. Using a structural VAR model, the study estimates the response of output gap, inflation, exchange rate, and interest rate and foreign exchange reserves to an exogenous shock to equity-based capital inflows. Its findings reveal that an exogenous increase in equity-based capital inflows has effect on inflation and interest rate but no influence on output gap, exchange rate etc. Thus, the short-run macroeconomic effects of exogenous capital inflows are partially attributed to changes in equity-based capital inflows.