Capital flows, EU integration and the global financial crisis: an empirical analysis

Figures & data

Figure 1. Average capital flows by type, integration status and the GFC.

Table 1. Descriptive Statistics.

	No Integration					Candidacy					Membership
	Obs.	Mean	St. Dev.	Min	Max	Obs.	Mean	St. Dev.	Min	Max	Obs.	Mean	St. Dev.	Min	Max
Net Flows/GDP (%)	157	6.8	7.1	−16.8	51.1	144	7.3	5.2	−4.1	33.3	206	2.6	7.3	−12.2	43.8
FDI/GDP (%)	157	4.0	4.4	0.1	36.2	144	4.8	3.9	−9.0	22.1	206	9.6	32.3	−77.0	264.4
Portfolio Inv./GDP (%)	137	0.1	2.9	−12.3	10.2	144	0.3	3.9	−29.2	10.3	206	−7.7	33.3	−231.8	72.8
Other Inv./GDP (%)	157	2.7	5.2	−19.7	30.2	144	2.2	4.6	−9.9	26.0	206	0.7	17.4	−58.4	84.7
US Real Interest Rates (%)	184	2.8	1.4	−0.4	4.5	144	1.8	1.3	−0.4	3.7	206	0.9	1.0	−0.4	3.6
Global Liquidity (% of GDP)	184	83.5	10.9	70.0	112.6	144	85.4	13.8	70.0	112.6	206	97.7	8.5	82.9	112.6
GDP Growth (%)	160	4.2	8.6	−14.1	89.0	144	3.6	3.9	−15.3	19.7	206	2.6	4.3	−14.8	12.0
Dom. Real Interest Rates (%)	169	−3.1	39.3	−91.4	434.5	144	1.0	5.5	−15.7	20.3	206	0.4	2.4	−7.1	6.3
Institutional Quality	117	−0.8	0.9	−1.9	1.3	144	−0.1	0.8	−1.5	1.6	206	0.7	0.6	−0.6	1.6

Table 2. Baseline Regression Models for Net Capital Flows.

	Candidacy						Membership
Post-GFC Dummy	−1.669	−1.513	−2.107	−1.809	−2.799	−1.748	−2.752	−2.281	−2.785	−2.375	−2.960*	−2.096
	(1.551)	(1.396)	(1.475)	(1.472)	(2.023)	(2.105)	(2.288)	(1.665)	(1.625)	(1.560)	(1.668)	(1.733)
EU Int. Dummy	3.332**	3.125	2.568	2.737	2.272	2.183	4.197**	3.432**	2.645	2.618	3.021*	2.989*
	(1.254)	(2.165)	(2.164)	(2.119)	(2.012)	(1.993)	(1.672)	(1.562)	(1.548)	(1.524)	(1.512)	(1.529)
EU Int. x GFC	−6.464***	−6.417***	−6.543***	−6.410***	−5.064**	−5.168**	−7.917**	−8.343***	−7.970***	−7.924***	−7.079**	−7.028**
	(1.744)	(1.794)	(1.832)	(1.822)	(2.264)	(2.221)	(3.136)	(2.703)	(2.656)	(2.648)	(2.689)	(2.643)
Inst. Quality (Lag, diff.)		3.673	4.619	3.892	3.984	3.652		5.085**	5.797**	5.029*	4.889**	4.590*
		(2.543)	(2.729)	(2.737)	(2.445)	(2.565)		(2.282)	(2.515)	(2.528)	(2.275)	(2.377)
US 10 YR Real Int.			−0.694**	−0.459*	−0.325	−0.110			−0.505*	−0.282	−0.104	0.100
			(0.259)	(0.248)	(0.219)	(0.238)			(0.245)	(0.252)	(0.225)	(0.281)
Global Liq. (diff.)				0.148**	0.143**	0.205***				0.147**	0.142**	0.200***
				(0.057)	(0.058)	(0.055)				(0.059)	(0.060)	(0.057)
Real Interest Rates					−0.171***	−0.184***					−0.165***	−0.178***
					(0.031)	(0.029)					(0.031)	(0.031)
GDP Growth						0.191*						0.179*
						(0.103)						(0.092)
Observations	507	429	429	429	429	429	507	429	429	429	429	429
R-squared	0.288	0.340	0.354	0.369	0.390	0.400	0.307	0.381	0.388	0.403	0.422	0.431

Notes: 1) EU Integration dummy implies the candidacy status for the first 6 columns and the membership status for others. 2) Country-specific fixed effects included in all models. 3) Standard errors in parentheses are clustered by countries. * p < 0.10, ** p < 0.05, *** p < 0.01

Table 3. Regression Models by Different Capital Flow Instruments.

	Candidacy			Membership
	FDI/GDP	Portfolio/GDP	Other/GDP	FDI/GDP	Portfolio/GDP	Other/GDP
Post-GFC Dummy	1.334	−0.153	−3.054	−0.572	0.268	−1.953
	(2.483)	(0.532)	(2.196)	(1.161)	(0.370)	(1.481)
EU Int. Dummy	1.156	0.351	2.835**	0.018	−1.286**	5.925**
	(1.415)	(0.675)	(1.320)	(0.794)	(0.604)	(2.434)
EU Int. x GFC	−3.646	−0.223	−3.370	−1.738	−0.232	−8.013***
	(2.573)	(0.726)	(2.383)	(1.637)	(0.745)	(2.296)
Institutional Quality (Lag, diff.)	−0.797	0.069	5.991**	−0.349	0.231	6.502**
	(1.535)	(1.668)	(2.579)	(1.725)	(1.647)	(2.395)
US 10 YR Real Int.	0.100	−0.037	−0.338	0.099	−0.188	0.126
	(0.131)	(0.137)	(0.534)	(0.234)	(0.147)	(0.750)
Global Liq. (diff.)	0.038	−0.029	0.154**	0.038	−0.027	0.144**
	(0.035)	(0.030)	(0.070)	(0.037)	(0.029)	(0.066)
Real Interest Rates	−0.038**	0.012	−0.128***	−0.045**	0.041	−0.135***
	(0.016)	(0.047)	(0.041)	(0.021)	(0.049)	(0.046)
GDP Growth	0.101*	−0.080	0.082	0.094*	−0.074	0.073
	(0.049)	(0.070)	(0.166)	(0.052)	(0.065)	(0.149)
Observations	383	375	429	383	375	429
R-squared	0.176	0.007	0.070	0.155	0.020	0.087

Notes: 1) EU Integration dummy implies the candidacy status for the first 3 columns and the membership status for others. 2) Country-specific fixed effects included in all models. 3) Cyprus and Malta are excluded from the net FDI and portfolio inflow regressions due to outliers. 4) Standard errors in parentheses are clustered by countries. * p < 0.10, ** p < 0.05, *** p < 0.01

Table 4. Estimation Results of Sequential g-estimation.

	Candidacy				Membership
	CF/GDP	FDI/GDP	Portfolio/GDP	Other/GDP	CF/GDP	FDI/GDP	Portfolio/GDP	Other/GDP
Post-GFC Dummy	−2.555*	−0.248	0.155	−2.084	−2.355	0.204	0.033	−2.626*
	(1.314)	(2.197)	(0.500)	(2.397)	(1.450)	(1.682)	(0.591)	(1.233)
EU Int. Dummy	0.406	2.179*	−0.725	0.890	−0.036	−0.511	−1.834	3.834*
	(1.838)	(1.063)	(0.822)	(2.471)	(1.546)	(0.595)	(1.363)	(1.918)
EU Int. x GFC	−5.610**	−2.067	0.514	−6.490**	−7.377**	−3.026	0.833	−7.887**
	(2.125)	(2.324)	(0.952)	(2.531)	(2.926)	(2.032)	(1.123)	(2.958)
GDP Growth	0.211**	0.120***	−0.019	−0.059	0.168**	0.110***	−0.035	−0.068
	(0.094)	(0.026)	(0.053)	(0.203)	(0.075)	(0.032)	(0.048)	(0.181)
Trade Openness	−0.038	0.002	−0.034	−0.015	−0.011	0.019	−0.015	−0.015
	(0.028)	(0.020)	(0.020)	(0.059)	(0.032)	(0.027)	(0.031)	(0.060)
Financial Openness	0.894*	−0.057	0.102	1.480	1.025**	0.139	0.220	1.067
	(0.439)	(0.230)	(0.133)	(1.357)	(0.388)	(0.286)	(0.159)	(1.157)
Financial Development	29.549***	−1.219	6.336*	23.360**	24.285**	0.190	9.528	11.705
	(8.743)	(5.551)	(3.278)	(10.052)	(9.044)	(5.940)	(5.531)	(10.724)
Observations	366	320	312	366	366	320	312	366
R-squared	0.487	0.376	0.104	0.087	0.517	0.385	0.116	0.093

Notes: 1) Dependent variables are demediated capital flows obtained from removing the impact of institutional quality from the first stage regression models consisting all pre-treatment and intermediate covariates. 2) EU Integration dummy implies the candidacy status for the first 4 columns and the membership status afterwards. 3) Country-specific fixed effects included in all models. 4) The first stage regression results are not shown in the table but available upon request. 5) Standard errors in parentheses are clustered by countries. * p < 0.10, ** p < 0.05, *** p < 0.01

Table A1: Average capital flows by integration status, type and before and after the GFC

Country	Integration	Net Flows / GDP (%)			FDI / GDP (%)			Portfolio / GDP (%)			Other / GDP (%)
		Before	After	Full	Before	After	Full	Before	After	Full	Before	After	Full
Albania	Not Int.	4.3	9.1	5.4	3.6	7.9	4.6	-0.3	0.4	0.0	0.8	0.8	0.8
	Candidate	-	9.2	9.2	-	8.0	8.0	-	-0.1	-0.1	-	1.2	1.2
Bosnia & Herz.	Not Int.	9.0	6.0	7.4	4.8	2.0	3.4	0.0	-0.5	-0.4	4.2	4.5	4.3
Bulgaria	Not Int.	2.6	-	2.6	1.3	-	1.3	-0.7	-	-0.7	1.7	-	1.7
	Candidate	11.2	-	11.2	9.4	-	9.4	-1.2	-	-1.2	3.1	-	3.1
	Member	37.7	-0.5	4.9	23.0	2.7	5.6	-2.0	-1.1	-1.2	16.6	-2.2	0.5
Croatia	Not Int.	9.7	-	9.7	3.0	-	3.0	1.6	-	1.6	5.1	-	5.1
	Candidate	12.1	3.8	8.0	5.5	2.3	3.9	-1.2	1.8	0.3	7.8	-0.3	3.7
	Member		-0.5	-0.5		2.4	2.4		-0.4	-0.4		-2.6	-2.6
Cyprus	Not Int.	2.2	-	2.2	2.2	-	2.2	-0.5	-	-0.5	0.6	-	0.6
	Candidate	4.3	-	4.3	4.9	-	4.9	-0.6	-	-0.6	0.1	-	0.1
	Member	9.6	3.9	5.6	1.5	-11.4	-7.6	-11.9	13.6	6.1	20.1	1.7	7.1
Czechia	Not Int.	7.2	-	7.2	2.2	-	2.2	2.1	-	2.1	2.9	-	2.9
	Candidate	6.8	-	6.8	7.2	-	7.2	-0.8	-	-0.8	0.5	-	0.5
	Member	3.5	3.8	3.7	4.0	1.4	2.2	-0.6	2.1	1.3	0.1	0.3	0.3
Estonia	Not Int.	10.7	-	10.7	3.1	-	3.1	2.5	-	2.5	5.1	-	5.1
	Candidate	8.3	-	8.3	5.8	-	5.8	0.9	-	0.9	1.6	-	1.6
	Member	13.7	-3.2	1.8	5.8	4.2	4.7	-3.3	-4.3	-4.0	11.2	-3.2	1.1
Hungary	Not Int.	5.8	-	5.8	6.2	-	6.2	3.4	-	3.4	-3.2	-	-3.2
	Candidate	7.8	-	7.8	4.5	-	4.5	2.6	-	2.6	0.7	-	0.7
	Member	11.5	-1.3	2.5	2.5	1.7	1.9	2.5	-0.6	0.3	6.6	-2.4	0.2
Kosovo	Not Int.	13.5	5.2	5.9	9.7	4.8	5.1	0.5	-1.4	-1.2	3.3	1.8	1.9
Latvia	Not Int.	8.1	-	8.1	6.1	-	6.1	-3.9	-	-3.9	5.8	-	5.8
	Candidate	7.3	-	7.3	3.0	-	3.0	-0.3	-	-0.3	4.6	-	4.6
	Member	18.6	-2.3	3.9	4.6	2.1	2.8	0.0	-2.6	-1.8	14.0	-1.8	2.9
Lithuania	Not Int.	8.5	-	8.5	2.0	-	2.0	0.9	-	0.9	5.6	-	5.6
	Candidate	8.3	-	8.3	4.2	-	4.2	1.7	-	1.7	2.4	-	2.4
	Member	11.1	-2.0	1.9	3.6	1.0	1.8	-0.3	0.6	0.3	7.8	-3.6	-0.2
Malta	Not Int.	6.5	-	6.5	5.6	-	5.6	-4.0	-	-4.0	5.0	-	5.0
	Candidate	4.8	-	4.8	4.7	-	4.7	-16.9	-	-16.9	16.9	-	16.9
	Member	4.7	-3.3	-0.9	120.8	87.1	97.0	-129.1	-83.1	-96.6	13.0	-7.2	-1.3
Montenegro	Not Int.	47.0	22.7	34.8	20.1	26.9	23.5	-0.4	2.3	1.0	27.3	-6.6	10.4
	Candidate	-	17.5	17.5	-	10.8	10.8	-	3.2	3.2	-	3.6	3.6
North Macedonia	Not Int.	7.0	-	7.0	3.7	-	3.7	0.4	-	0.4	2.9	-	2.9
	Candidate	9.1	4.0	5.0	6.9	2.8	3.6	0.8	1.1	1.1	1.4	0.2	0.4
Poland	Not Int.	2.0	-	2.0	2.1	-	2.1	0.4	-	0.4	-0.4	-	-0.4
	Candidate	4.8	-	4.8	3.4	-	3.4	1.0	-	1.0	0.5	-	0.5
	Member	5.6	3.0	3.8	3.2	1.8	2.2	1.0	1.1	1.1	1.5	0.0	0.5
Romania	Not Int.	4.4	-	4.4	1.8	-	1.8	0.6	-	0.6	2.0	-	2.0
	Candidate	10.4	-	10.4	4.9	-	4.9	0.5	-	0.5	5.0	-	5.0
	Member	14.5	1.7	3.5	5.8	2.1	2.6	0.1	1.8	1.6	8.6	-2.2	-0.7
Serbia	Not Int.	16.9	10.4	13.0	7.6	6.5	6.9	0.9	1.6	1.3	8.4	2.4	4.8
	Candidate	-	4.9	4.9	-	5.2	5.2	-	0.8	0.8	-	-1.2	-1.2
Slovakia	Not Int.	3.6	-	3.6	0.9	-	0.9	0.1	-	0.1	2.6	-	2.6
	Candidate	6.7	-	6.7	4.8	-	4.8	1.2	-	1.2	0.8	-	0.8
	Member	7.7	2.2	3.8	5.4	0.8	2.2	-0.6	0.5	0.2	2.8	0.9	1.5
Slovenia	Not Int.	3.5	-	3.5	1.0	-	1.0	1.3	-	1.3	1.1	-	1.1
	Candidate	3.9	-	3.9	1.5	-	1.5	0.4	-	0.4	2.0	-	2.0
	Member	3.6	-2.8	-0.9	-0.2	1.1	0.7	-3.5	1.4	0.0	7.5	-5.3	-1.5
Turkey	Not Int.	2.0	-	2.0	0.3	-	0.3	0.6	-	0.6	1.0	-	1.0
	Candidate	4.1	3.6	3.8	1.5	1.1	1.2	0.5	1.2	0.9	2.2	1.3	1.7
TOTAL	Not Int.	6.5	7.5	6.8	3.5	5.7***	4.0	0.2	-0.3	0.1	2.9	2.2	2.7
	Candidate	7.3	7.2	7.3	4.8	4.9	4.8	-0.4	1.4***	0.3	2.9	0.9**	2.2
	Member	10.2	-0.1***	2.6	15.1	7.6	9.6	-13.6	-5.6	-7.7	8.8	-2.1***	0.7
	Full Sample	7.5	2.6***	5.2	6.3	6.7	6.5	-3.0	-3.3	-3.1	4.1	-0.8***	1.8

Note: ** and *** show that the difference between mean flows before and after the GFC is statistically significant at 95 and 99 percent level. Due to lack of sufficient data, the mean difference test is only performed for total sample.

Table A2: Description and Sources of Variables

Variable	Description	Source
Net Capital Flows	Capital and financial account excluding reserves, % of GDP	IMF - BOP Database
Foreign Direct Investment	Foreign Direct Investment, % of GDP	IMF - BOP Database
Portfolio Investment	Portfolio Investment, % of GDP	IMF - BOP Database
Other Investments	Financial derivatives and other credit flows, % of GDP	IMF - BOP Database
US Real Interest Rates	10-Year Treasury Constant Maturity Rate (%), deflated by inflation.	Fed. Res. Bank of St. Louis
Global Liquidity	The GDP-weighted sum of reference monetary aggregates as a percent to GDP for the US, Euro Area, Japan, and the UK.	IMF - WEO DatabaseCentral Banks of relevant countries
GDP Growth	y-o-y changes in constant price GDP (%)	IMF - WEO Database
Domestic Real Interest Rates	Deposit interest rates for most of the countries. For Estonia, Latvia, Lithuania, and Malta harmonized Euro Area interest rates, for Cyprus, Slovakia, and Slovenia benchmark government bond yields, and for Poland monetary policy interest rates are used. (%) All data are deflated by inflation.	IMF - IFSIMF - WEO Database
Institutional Quality	The composite index measuring institutional quality based on six dimensions of governance. The overall index is constructed by factor analysis. As it is only available on a two-year basis until 2002, we take the average of respective two years to fill missing years.	Worldwide Governance Indicators
Trade Openness	The sum of exports and imports of goods and services as a percent of GDP (%)	The World Bank - World Development Indicators
Financial Development Index	The index measures the level of development of financial institutions and markets across countries in terms of access, depth, and efficiency on a scale of 0 to 1.	IMF - Financial Development Index
Financial Openness	The index measures de jure financial openness in four dimensions: i) capital account openness, ii) current account openness, iii) the stringency of requirements for the repatriation and/or surrender of export proceeds, and iv) the existence of multiple exchange rates for capital account transactions. In a scale of 0 to 1, higher values indicate more open financial systems.	Chinn and Ito (2008)

Table A3: Results of the Factor Analysis for Institutional Quality

Factor	Eigenvalue	Difference	Proportion	Cumulative
Factor 1	5.161	4.940	0.972	0.972
Factor 2	0.221	0.192	0.042	1.014
Factor 3	0.029	0.045	0.006	1.020
Factor 4	-0.016	0.008	-0.003	1.017
Factor 5	-0.024	0.042	-0.004	1.012
Factor 6	-0.065	.	-0.012	1.000

LR Test Chi-squared: 4,480***

Bartlett Chi-squared: 4,470***

KMO Measure: 0.873

* p<0.10, ** p<0.05, *** p<0.01

Table A4: Factor Loadings and Unique Variances

Variable	Factor 1	Uniqueness
Control of Corruption	0.969	0.062
Government Effectiveness	0.946	0.105
Political Stability	0.933	0.130
Regulatory Quality	0.942	0.112
Rule of Law	0.839	0.297
Voice and Accountability	0.930	0.134

Table A5: Correlation Matrix of Explanatory Variables

	US Real Interest Rates (%)	Global Liquidity (% of GDP)	GDP Growth (%)	Dom. Real Interest Rates (%)	Institutional Quality	Candidacy Dummy	Membership Dummy	Post-GFC Dummy
US Real Interest Rates (%)	1.000
Global Liquidity (% of GDP)	-0.718	1.000
GDP Growth (%)	0.069	-0.282	1.000
Dom. Real Interest Rates (%)	-0.069	0.055	0.194	1.000
Institutional Quality	-0.075	0.083	-0.090	-0.171	1.000
Candidacy Dummy	-0.509	0.339	-0.095	0.078	0.546	1.000
Membership Dummy	-0.488	0.511	-0.107	0.036	0.584	0.575	1.000
Post-GFC Dummy	-0.611	0.849	-0.256	0.075	0.062	0.386	0.460	1.000

Table A6: Results of VIF Analysis

Variables	Candidacy		Membership
	VIF	1/VIF	VIF	1/VIF
GFC dummy	9.58	0.104	4.79	0.209
EU Integration dummy	3.37	0.297	4.01	0.249
EU Int. x GFC	10.17	0.098	6.25	0.160
Inst. Quality (Lag, diff.)	1.78	0.563	2.00	0.499
US 10 YR Real Int.	1.44	0.696	1.44	0.696
Global Liq. (diff.)	1.66	0.602	1.66	0.603
Real Interest Rates	1.46	0.683	1.52	0.660
GDP Growth	1.14	0.874	1.15	0.871
Mean VIF	2.71		2.40

Note: VIF values for individual fixed effects are not shown in the table.

Table A7: Dynamic Panel Data Model Estimation Results

	Candidacy				Membership
	CF/GDP	FDI/GDP	Portfolio / GDP	Other/GDP	CF/GDP	FDI/GDP	Portfolio / GDP	Other/GDP
Lag of Dependent	0.493***	0.397***	0.254***	0.216***	0.470***	0.411***	0.244***	0.203***
	(0.038)	(0.120)	(0.072)	(0.017)	(0.036)	(0.112)	(0.072)	(0.019)
Post-GFC Dummy	-1.625	0.877	0.259	-3.405	-1.258	-0.504	0.448	-2.081
	(1.311)	(1.583)	(0.465)	(2.079)	(0.947)	(0.752)	(0.284)	(1.243)
EU Int. Dummy	1.592	0.690	0.285	2.681**	1.091	-0.043	-1.018**	4.422*
	(1.053)	(0.771)	(0.550)	(1.069)	(0.765)	(0.461)	(0.440)	(2.449)
EU Int. x GFC	-2.422*	-2.317	-0.417	-2.970	-3.974***	-0.798	-0.297	-7.167***
	(1.286)	(1.679)	(0.623)	(2.259)	(1.372)	(0.866)	(0.564)	(2.197)
Instit. Quality (Lag, diff.)	0.781	-1.228	-0.991	5.593	1.273	-0.998	-0.847	6.031*
	(1.944)	(1.373)	(1.775)	(3.501)	(1.833)	(1.502)	(1.735)	(3.323)
US 10 YR Real Int.	-0.332	0.102	0.018	-0.809	-0.292	0.105	-0.100	-0.471
	(0.251)	(0.116)	(0.125)	(0.597)	(0.277)	(0.181)	(0.134)	(0.801)
Global Liq. (diff.)	0.112**	0.010	-0.001	0.101*	0.114**	0.009	0.000	0.096*
	(0.040)	(0.031)	(0.035)	(0.054)	(0.041)	(0.033)	(0.034)	(0.052)
Real Interest Rates	-0.058	-0.033	0.004	-0.047	-0.041	-0.038	0.029	-0.044
	(0.044)	(0.022)	(0.040)	(0.066)	(0.038)	(0.030)	(0.041)	(0.076)
GDP Growth	0.226**	0.076	-0.041	0.058	0.221**	0.072	-0.039	0.053
	(0.096)	(0.049)	(0.060)	(0.150)	(0.089)	(0.054)	(0.055)	(0.136)
Observations	427	381	372	427	427	381	372	427
R-squared	0.567	0.313	0.065	0.111	0.576	0.302	0.074	0.122

Notes: 1) EU Integration dummy implies the candidacy status for the first 4 columns and the membership status for others. 2) Country-specific fixed effects included in all models. 3) Cyprus and Malta are excluded from the net FDI and portfolio inflow regressions due to outliers. 4) Standard errors in parentheses are clustered by countries. * p<0.10, ** p<0.05, *** p<0.01

Table A8: Estimation Results for the Former Eastern Bloc countries

	Candidacy				Membership
	CF/GDP	FDI/GDP	Portfolio / GDP	Other/GDP	CF/GDP	FDI/GDP	Portfolio / GDP	Other/GDP
Post-GFC Dummy	-1.912	1.288	-0.417	-2.716	-2.958	-0.604	-0.075	-2.219*
	(2.275)	(2.461)	(0.543)	(2.033)	(2.149)	(1.493)	(0.360)	(1.244)
EU Int. Dummy	3.459	1.169	0.321	2.000	3.297*	0.073	-1.204*	4.388**
	(2.337)	(1.579)	(0.790)	(1.200)	(1.878)	(0.802)	(0.625)	(1.603)
EU Int. x GFC	-6.451**	-3.701	-0.229	-2.631	-7.170**	-1.598	-0.100	-5.583**
	(2.440)	(2.599)	(0.799)	(2.244)	(3.185)	(1.869)	(0.769)	(2.189)
Institutional Quality (Lag, diff.)	5.545*	-0.564	0.238	5.995**	5.692*	-0.490	0.279	5.984**
	(2.832)	(1.617)	(1.783)	(2.479)	(2.711)	(1.813)	(1.776)	(2.404)
US 10 YR Real Int.	-0.280	0.115	-0.055	-0.360	0.008	0.157	-0.197	0.017
	(0.286)	(0.143)	(0.156)	(0.336)	(0.318)	(0.246)	(0.170)	(0.399)
Global Liq. (diff.)	0.184**	0.040	-0.041	0.181**	0.185**	0.045	-0.037	0.174**
	(0.063)	(0.037)	(0.031)	(0.070)	(0.064)	(0.039)	(0.030)	(0.066)
Real Interest Rates	-0.161***	-0.043**	0.011	-0.136***	-0.182***	-0.058***	0.041	-0.155***
	(0.034)	(0.016)	(0.067)	(0.025)	(0.031)	(0.018)	(0.068)	(0.023)
GDP Growth	0.141	0.104*	-0.125*	0.157	0.145	0.108*	-0.115*	0.148
	(0.127)	(0.056)	(0.068)	(0.111)	(0.121)	(0.057)	(0.065)	(0.104)
Observations	360	360	352	360	360	360	352	360
R-squared	0.439	0.185	0.013	0.273	0.456	0.159	0.023	0.313

Notes: 1) EU Integration dummy implies the candidacy status for the first 4 colunms and the membership status afterwards. 2) Country-specific fixed effects included in all models. 3) In line with the Modified Wald test for heteroscedasticity results, standard errors are clustered by countries. 4) Standard errors in parentheses are clustered by countries. * p<0.10, ** p<0.05, *** p<0.01