Relationship between U.S. Monetary Policy and Capital Outflows from BRICS Nations

This paper investigates the effects of U.S. monetary tightening on capital outflows from BRICS nations. Existing literature often conflates the experiences of BRICS nations with those of other emerging market economies (EMEs), overlooking the unique characteristics that differentiate these economies. This study aims to bridge that gap by employing a comprehensive dataset spanning the past 25 years, encompassing various economic cycles. This study will help evaluate the possibility for BRICS nations holding a distinctive resilience in the face of U.S. monetary policy changes. By examining economic indicators, financial integration, and institutional responses, my analysis hopes to highlight the idiosyncratic features of BRICS economies that makes them able to handle capital outflows in a manner dissimilar to other EMEs. The significance of this research lies both in its distinctness from a vast pool of research on international monetary policy's effects on capital flows, and in its potential to better understand methods for EMEs to protect foreign investment from capital flight. BRICS nations, comprising Brazil, Russia, India, China, and South Africa, have established themselves as powerhouses in the global economy. By comparing the responses of these BRICS nations to those of other emerging market economies, this study will highlight the structural differences behind the BRICS nations' resilience to capital outflows. It will also examine how a relative lack of global financial integration from BRICS countries may allow them to better safeguard international investments from the shocks associated with U.S. monetary policy changes. In doing so this research aims to offer a nuanced perspective that diverges from previous research.