KFstar and Portfolio Inflows: A Focus on Latin America

John D. Burger; Francis E. Warnock; Veronica Cacdac Warnock

doi:10.3386/w30453

KFstar and Portfolio Inflows: A Focus on Latin America

John D. Burger, Francis E. Warnock & Veronica Cacdac Warnock

Working Paper 30453

DOI 10.3386/w30453

Issue Date September 2022

Latin American portfolio inflows show a strong tendency to revert to a natural level, KF*, over medium-run horizons. Deviations of actual flows from KF* provide policymakers with a real-time predictor of future flows, sudden stops and vulnerability to global shocks. Analysis of short-run deviations of flows from KF* reveals heterogeneous drivers: commodity prices for Brazil, Chile, and Mexico; risk tolerance for Argentina, Costa Rica, and Peru.

This paper was prepared for the XXIV Annual Conference of the Central Bank of Chile. Burger acknowledges support from the France-Merrick Foundation. Francis Warnock thanks the International Finance Division of the Board of Governors of the Federal Reserve System for its ongoing hospitality. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

John D. Burger
John D. Burger acknowledges financial support from the Central Bank of Chile.

Veronica Cacdac Warnock
Veronica Cacdac Warnock acknowledges funding from the Central Bank of Chile.
MARC RIS BibTeΧ

KFstar and Portfolio Inflows: A Focus on Latin America

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