U.S. INTEREST RATES AND PORTFOLIO INVESTMENTS IN LATIN AMERICA
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This paper analyzes the relationship between U.S. interest rates and portfolio investments in four Latin American countries: Argentina Brazil, Chile, and Mexico. The paper finds that U.S. interest rate fluctuations have a significant negative impact on capital flows to these countries, including direct investment and other capital as well as portfolio capital flows. Differences do exist across countries and they relate to country-specific macroeconomics policies and financial reforms. The finding of this study have important implications for international monetary and financial issues and macroeconomic policies in emerging markets
Abstract
This paper analyzes the relationship between U.S. interest rates and portfolio investments in four Latin American countries: Argentina Brazil, Chile, and Mexico. The paper finds that U.S. interest rate fluctuations have a significant negative impact on capital flows to these countries, including direct investment and other capital as well as portfolio capital flows. Differences do exist across countries and they relate to country-specific macroeconomics policies and financial reforms. The finding of this study have important implications for international monetary and financial issues and macroeconomic policies in emerging markets