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Article
DETERMINANTS OF CAPITAL FLOWS TO EMERGING MARKET ECONOMY: A CASE OF UKRAINE
Tetiana Bogdan
ABSTRACT. This paper examines the impact of global financial market volatility, fluctuations of global commodity prices and country fundamentals on the spread "EMBIG-Ukraine", which determines the volume of foreign capital inflows to economy of Ukraine. Author decomposes the changes in spreads into the contribution of global "push" factors and country- specific "pull" factors. The role of country fundamentals (i.e., real GDP, export growth, foreign exchange reserves and public debt) in driving bond spreads is examined. The author estimates the effects of "push" and "pull" factors on the foreign bond spreads, and, thereafter, the effects of spreads on the debt-creating capital flows to a corporate sector of Ukraine. The proposed analytical framework and econometric models may be used for forecasting purposes .
KEYWORDS: capital flows, push and pull factors, global appetite for risk, emerging markets, "EMBIG-Ukraine" spread.
JEL classification: E44, F36, F37.