02303cas a2200277 a 4500 AALejournalIMF015379 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513508146 1018-5941 BD-DhAAL BD-DhAAL Araujo, Juliana. Joining the Club? : Procyclicality of Private Capital Inflows in Low Income Developing Countries / Juliana Araujo, Antonio David, Carlos van Hombeeck, Chris Papageorgiou. Washington, D.C. : International Monetary Fund, 2015. 1 online resource (42 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Using a newly developed dataset this paper examines the cyclicality of private capital inflows to low-income developing countries (LIDCs) over the period 1990-2012. The empirical analysis shows that capital inflows to LIDCs are procyclical, yet considerably less procyclical than flows to more advanced economies. The analysis also suggests that flows to LIDCs are more persistent than flows to emerging markets (EMs). There is also evidence that changes in risk aversion are a significant correlate of private capital inflows with the expected sign, but LIDCs seem to be less sensitive to changes in global risk aversion than EMs. A host of robustness checks to alternative estimation methods, samples, and control variables confirm the baseline results. In terms of policy implications, these findings suggest that private capital inflows are likely to become more procyclical as LIDCs move along the development path, which could in turn raise several associated policy challenges, not the least concerning the reform of traditional monetary policy frameworks. Mode of access: Internet David, Antonio. Papageorgiou, Chris. van Hombeeck, Carlos. IMF Working Papers; Working Paper ; No. 2015/163 Full text available on IMF http://elibrary.imf.org/view/journals/001/2015/163/001.2015.issue-163-en.xml IMF e-Library