Fratscher (2012) focuses on the correlates of various types of capital flows in 50 emerging markets, and specifically on the collapse in capital flows during the 2008 global financial crisis. He finds that common shocks had a large effect on capital flows both during the crisis and in the subsequent recovery phase. However, these effects varied across countries, a pattern that he attributes to differences in the quality of domestic institutions, country risk, and the strength of domestic macroeconomic fundamentals.

Forbes and Warnock (2014) observe that investment outflows from emerging markets have become larger over time and have different dynamics than inflows (insights that we build on here). They distinguish several episodes of large increases and declines in the inflows and outflows of capital: surges, stops, retrenchments and flight, analyzing them separately. Using quarterly data from 1980-2009 for 50 developing and advanced economies, they further separate out events primarily driven by the decline in debt flows (portfolio debt and banking flows) and those driven by the decline in equity flows (FDI and portfolio equity).

The authors find that episodes dominated by equity-related flows are not associated with the standard explanatory variables (global risk and liquidity; contagion; domestic growth, etc.). In contrast, the standard measures of market risk are important for the incidence of debt-led episodes: for example, when risk aversion is high, debt-led surges are less likely and debt-led stops are more likely. Contagion at the regional level is also important in debt-led episodes. Country-specific variables are largely insignificant, with the exception of domestic growth shocks: debt-led stops are more likely in countries experiencing negative growth shocks, and debt-led surges are more likely in countries with positive growth shocks.

A few studies focus on particular types of capital flows, FDI flows for example. Lipsey (2001) points to the fact that in some prominent financial and exchange rate crises in the past – the Latin American crisis in 1982, the Mexican crisis in 1994, the East Asian crisis in 1997 – FDI inflows were more stable than portfolio or other capital inflows. Aguiar, and Gopinath (2005) similarly note the stability of FDI flows during the Asian crisis, which they attribute to the acquisition by foreign investors of domestic firms which faced liquidity pressures.

Milesi-Ferretti and Tille (2011) analyze gross capital inflows around the 2008 global financial crisis. They find that capital flows differed across countries and types of flows; that bank flows were hit the hardest; that emerging economies experienced a shorter-lived retrenchment than developed economies; and that the magnitude of decline in capital inflows across countries was linked to the extent of international financial integration.

A recent study by Blanchard and Acalin (2016) is something of an outlier. It observes that FDI inflows and outflows are highly correlated and that FDI inflows to emerging-market economies are positively correlated with the US policy rate. They interpret this as implying that true FDI flows to emerging markets are in fact smaller than measured flows; perhaps because part of recorded FDI flows in fact transit through the country due in part to tax arbitrage. They consider several alternative hypotheses such as (i) common trend in inflows and outflows, (ii) seasonality, (iii) 4