An Empirical Analysis Of The International Capital Flow "Sudden Stop" To Macro-aggregate Demand Effects

The financial crisis in Thailand and South Korea in the1990s attracted the attention of theacademia. The study found that the fuse of the crisis is international capital flows suddenly stoppedor reversed, and a large number of subsequent international capitals withdrawn. International capitalflows suddenly stop or reverse refers to a country before the crisis, a lot of foreign investment intoand a large number of withdrawals in times of foreign crisis, followed by domestic macroeconomicdeterioration. Scholars at home and abroad research "sudden stop" focused on the relationshipbetween international capital flow reversals and banking crises and currency crises, the impact onasset prices of International capital flows reverse as well as the smoothing method of financial crisisbased on the moral hazard model. For international capital flows "sudden stop" on themacro-aggregate demand impact analysis, research in this area is relatively small. In this paper, theempirical analysis to explore the international capital flows "sudden stop" affects themacro-aggregate demand channel, for the prevention of "sudden stop" crisis has major implications.In this paper we established the VAR model, use Thailand1991-2009, macroeconomic data,empirical research occurred in1997and1998, the international flow of capital reversed the impactof the crisis on the macro-aggregate demand. Through the residual analysis and the study of theimpulse response function, results show that when one country, the international mobility of capitalreversal, affecting investment and government consumption, while the impact on privateconsumption, imports, exports, is not particularly significant. This provides a new approach to ourregulatory, and a variety of international mobility of capital, pay close attention to its impact oninvestment and government consumption. Precursor of capital flow reversals crisis, we should focuson the investment and government consumption up to formulate policies to ensure that investmentand government consumption is not significant sudden drop in capital reversal occurs, so that evenif the outbreak of the crisis in the domestic economy remained stable.This article through the following aspects of the capital flow reversal risk are studied: first ofall, clear international capital of the concept, classification and different international capital andfinancial crisis and the relationship between the influencing factors, this is the premise of the study;Second, for the developing countries several times in depth the financial crisis of the research, andto sum up the experience; Again, focuses on the Thai capital flow reversal crisis of empiricalanalysis, and study the influence of macro total demand degree and ways; Finally, in view of thepresent situation in our country of international capital regulation the feasible measures to improve.