Monetary policy attracts capital inflows, shaping global investment landscape.
The article explores how central banks influence the movement of money in and out of a country. They found that small changes in interest rates can attract a small amount of money into the country. Factors like reserves, growth, and openness attract money, while debt, controls, and interest rate differences deter it. Global risks have a bigger impact than local risks. Different types of money flows respond differently to these changes, with banking flows being the most sensitive and foreign direct investment being the least.