The Impact Of Macroprudential Policies On Sudden Stops In Capital Inflows

While foreign capital inflows have boosted domestic economic development,the sudden stop of large-scale capital inflows has also brought serious economic challenges.How to curb the sudden stop of capital inflow is of great practical significance to China’s realization of financial stability and high-quality economic development.The 19 th National Congress of the Communist Party of China listed macro-prudential policy and monetary policy as the dual pillars of national regulation and control,and the impact of macro-prudential policy on cross-border short-term capital flows deserves in-depth exploration.From the perspective of cross-border short-term capital flows,this paper studies the impact of macroprudential policies on sudden stop of capital inflows,and also considers the impact of different types of cross-border capital inflows on sudden stops of capital inflows.Therefore,this paper links macroprudential policy,capital inflow structure and sudden stop of total capital inflow,collects relevant quarterly data from 46 countries from 2000 to 2021,a total of 3698 samples,constructs a complementary log-log model related to sudden stop of capital inflow and a fixed-effect model of macroprudential policy and capital inflow structure,empirically studies macroprudential policy,The impact of capital inflow structure on sudden stops in total capital inflows.The main results show that:(1)macroprudential policies can effectively curb the occurrence of sudden stops in total capital inflows.(2)The structure of capital inflows plays an intermediary role between macroprudential policies and sudden stops in capital inflows.(3)The intermediary effect of macroprudential policies through the capital inflow structure accounted for 37.5% of the total effect.In order to ensure the robustness of the results,this paper analyzes the heterogeneity of the samples by national level and macroprudential policy tool level.Overall,the robustness test results are consistent with the main results in this paper.Finally,through the mechanism analysis of mediation effect and interaction effect,this paper decomposes the total effect into four sub-effects,tests the effectiveness of the intermediary variable and the proportion of indirect effect in the total effect,and provides support for the capital inflow structure as the mediary variable that affects the sudden stop of capital inflow under macroprudential policies.Accordingly,this paper puts forward the following three suggestions:(1)Improve the top-level institutional design of the macro-prudential policy system and strengthen the supervision of cross-border capital flows.(2)Flexibly use macro-prudential tools to promote the formation of a long-term and stable structure of foreign capital inflow.(3)Promote high-quality economic and financial development,and strengthen the role of macro-prudential policies in curbing sudden stops in capital inflows.