Capital flight to Germany : Two alternative measures

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Article number102095
Journal / PublicationJournal of International Money and Finance
Online published9 Nov 2019
Publication statusPublished - Apr 2020


We use two measures to study two capital flight channels for Germany. One measure is based on the concept of trade misinvoicing and one on net claims and liabilities in the Eurosystem of central banks. For both measures, we propose refinements to enhance the assessment of capital flight. We find that capital flight towards Germany via these two channels has been quite sizable in the recent decade and can tally to about 2% of GDP annually. Regarding their determinants, we show that the two capital flight measures are driven by both common and measure-specific factors. Traditional determinants such as covered interest differentials only play a limited role, while crisis-specific factors such as economic policy uncertainty, the ECB collateral policy, as well as currency misalignment are driving factors of the investors’ apparent flight-to-safety behavior.

Research Area(s)

  • Economic policy uncertainty, Flight-to-safety, Illicit capital flight, TARGET2 balance, Trade misinvoicing

Citation Format(s)