Taming the Tide of Capital Flows

Taming the Tide of Capital Flows PDF Author: Atish R. Ghosh
Publisher: MIT Press
ISBN: 0262343762
Category : Political Science
Languages : en
Pages : 489

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Book Description
A comprehensive examination of policy measures intended to help emerging markets contend with large and volatile capital flows. While always episodic in nature, capital flows to emerging market economies have been especially volatile since the global financial crisis. After peaking at $680 billion in 2007, flows to emerging markets turned negative at the onset of crisis in 2008, then rebounded only to recede again during the U.S. sovereign debt downgrade in 2011. Since then, flows have continued to swing wildly, leaving emerging market policy makers wondering whether they can put in place policies during the inflow phase that will soften the blow when flows subsequently recede. This book offers the first comprehensive treatment of policy measures intended to help emerging markets contend with large and volatile capital flows. The authors, all IMF experts, explain that, in the spirit of liberalization and deregulation in the 1980s and 1990s, many emerging market governments eliminated capital inflow controls along with outflow controls. By 2012, however, capital inflow controls were again acknowledged as legitimate policy tools. Focusing on the macroeconomic and financial-stability risks associated with capital flows, the authors combine theoretical and empirical analysis to consider the interaction between monetary, exchange rate, macroprudential, and capital control policies to mitigate these risks. They examine the effectiveness of various policy tools, discuss the practical considerations and multilateral implications of their use, and provide concrete policy advice for dealing with capital inflows.

Taming the Tide of Capital Flows

Taming the Tide of Capital Flows PDF Author: Atish R. Ghosh
Publisher: MIT Press
ISBN: 0262343762
Category : Political Science
Languages : en
Pages : 489

Get Book Here

Book Description
A comprehensive examination of policy measures intended to help emerging markets contend with large and volatile capital flows. While always episodic in nature, capital flows to emerging market economies have been especially volatile since the global financial crisis. After peaking at $680 billion in 2007, flows to emerging markets turned negative at the onset of crisis in 2008, then rebounded only to recede again during the U.S. sovereign debt downgrade in 2011. Since then, flows have continued to swing wildly, leaving emerging market policy makers wondering whether they can put in place policies during the inflow phase that will soften the blow when flows subsequently recede. This book offers the first comprehensive treatment of policy measures intended to help emerging markets contend with large and volatile capital flows. The authors, all IMF experts, explain that, in the spirit of liberalization and deregulation in the 1980s and 1990s, many emerging market governments eliminated capital inflow controls along with outflow controls. By 2012, however, capital inflow controls were again acknowledged as legitimate policy tools. Focusing on the macroeconomic and financial-stability risks associated with capital flows, the authors combine theoretical and empirical analysis to consider the interaction between monetary, exchange rate, macroprudential, and capital control policies to mitigate these risks. They examine the effectiveness of various policy tools, discuss the practical considerations and multilateral implications of their use, and provide concrete policy advice for dealing with capital inflows.

Managing Volatile Capital Flows: Experiences and Lessons for Sub-Saharan African Frontier Markets

Managing Volatile Capital Flows: Experiences and Lessons for Sub-Saharan African Frontier Markets PDF Author: Cheikh A. Gueye
Publisher: International Monetary Fund
ISBN: 1616358440
Category : Business & Economics
Languages : en
Pages : 39

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Book Description
During the past three years the frontier markets of sub-Saharan Africa have received growing amounts of portfolio capital flows, with heightened interest from foreign investors. Compared with foreign direct investment, portfolio capital flows tend to be more volatile, and thus pose challenges for sub-Saharan African frontier markets. This study examines the evolution of capital flows since 2010 and discusses the policies these countries have designed to reduce risks from the inherent volatility of these flows.

Capital Flows at Risk: Taming the Ebbs and Flows

Capital Flows at Risk: Taming the Ebbs and Flows PDF Author: Mr.R. G Gelos
Publisher: International Monetary Fund
ISBN: 1513522906
Category : Business & Economics
Languages : en
Pages : 44

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Book Description
The volatility of capital flows to emerging markets continues to pose challenges to policymakers. In this paper, we propose a new framework to answer critical policy questions: What policies and policy frameworks are most effective in dampening sharp capital flow movements in response to global shocks? What are the near- versus medium-term trade-offs of different policies? We tackle these questions using a quantile regression framework to predict the entire future probability distribution of capital flows to emerging markets, based on current domestic structural characteristics, policies, and global financial conditions. This new approach allows policymakers to quantify capital flows risks and evaluate policy tools to mitigate them, thus building the foundation of a risk management framework for capital flows.

Capital Flows and Financial Crises

Capital Flows and Financial Crises PDF Author: Miles Kahler
Publisher: Cornell University Press
ISBN: 1501731408
Category : Political Science
Languages : en
Pages : 284

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Book Description
Capital flows to the developing economies have long displayed a boom-and-bust pattern. Rarely has the cycle turned as abruptly as it did in the 1990s, however: surges in lending were followed by the Mexican peso crisis of 1994-95 and the sudden collapse of currencies in Asia in 1997. This volume maps a new and uncertain financial landscape, one in which volatile private capital flows and fragile banking systems produce sudden reversals of fortune for governments and economies. This environment creates dilemmas for both national policymakers who confront the "mixed blessing" of capital inflows and the international institutions that manage the recurrent crises.The authors—leading economists and political scientists—examine private capital flows and their consequences in Latin America, Pacific Asia, and East Europe, placing current cycles of lending in historical perspective. National governments have used a variety of strategies to deal with capital-account instability. The authors evaluate those responses, prescribe new alternatives, and consider whether the new circumstances require novel international policies.

Curbing the Boom-Bust Cycle: Stabilizing Capital Flows to Emerging Markets

Curbing the Boom-Bust Cycle: Stabilizing Capital Flows to Emerging Markets PDF Author: Williamson, John
Publisher: Peterson Institute
ISBN: 9780881325966
Category :
Languages : en
Pages : 160

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Book Description


Gross Private Capital Flows to Emerging Markets

Gross Private Capital Flows to Emerging Markets PDF Author: Erlend Nier
Publisher: International Monetary Fund
ISBN: 1498351867
Category : Business & Economics
Languages : en
Pages : 35

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Book Description
This paper assesses empirically the key drivers of private capital flows to a large sample of emerging market economies in the last decade. It analyzes the effect of the global financial cycle, measured by the VIX, on capital flows and investigates the role of fundamentals and country characteristics in mitigating or amplifying its effect. Using interaction models, we find the effect of the VIX to be non-linear. For low levels of the VIX, capital flows are driven by fundamental factors. During periods of stress, the VIX becomes the dominant driver of capital flows while other determinants, with the exception of interest rate differentials, lose statistical significance. Our results also suggest that the effect of global financial conditions on gross private capital flows increases with the host country’s level of financial sector development. Finally, our results imply that countries cannot fully insulate themselves from global financial shocks, unless creating a fragmented global financial system.

Capital Flows and the Emerging Economies

Capital Flows and the Emerging Economies PDF Author: Sebastian Edwards
Publisher: University of Chicago Press
ISBN: 0226184722
Category : Business & Economics
Languages : en
Pages : 366

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Book Description
The 1990s witnessed several acute currency crises among developing nations that invariably spread to other nearby at-risk countries. These episodes—in Mexico, Thailand, South Korea, Russia, and Brazil—were all exacerbated by speculative foreign investments and high-volume movements of capital in and out of those countries. Insufficient domestic controls and a sluggish international response further undermined these economies, as well as the credibility of external oversight agencies like the International Monetary Fund. This timely volume examines the correlation between volatile capital mobility, currency instability, and the threat of regional contagion, focusing particular attention on the emergent economies of Latin America, Southeast Asia, and Eastern Europe. Together these studies offer a new understanding of the empirical relationship between capital flows, international trade, and economic performance, and also afford key insights into realms of major policy concern.

Managing Capital Flows

Managing Capital Flows PDF Author: Masahiro Kawai
Publisher: Edward Elgar Publishing
ISBN: 184980687X
Category : Business & Economics
Languages : en
Pages : 465

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Book Description
Managing Capital Flows provides analyses that can help policymakers develop a framework for managing capital flows that is consistent with prudent macroeconomic and financial sector stability. While capital inflows can provide emerging market economies with invaluable benefits in pursuing economic development and growth, they can also pose serious policy challenges for macroeconomic management and financial sector supervision. The expert contributors cover a wide range of issues related to managing capital flows and analyze the experience of emerging Asian economies in dealing with surges in capital inflows. They also discuss possible policy measures to manage capital flows while remaining consistent with the goals of macroeconomic and financial sector stability. Building on this analysis, the book presents options for workable national policies and regional policy cooperation, particularly in exchange rate management. Containing chapters that bring in international experiences relevant to Asia and other emerging market economies, this insightful book will appeal to policymakers in governments and financial institutions, as well as public and private finance experts. It will also be of great interest to advanced students and academic researchers in finance.

Capital Flows are Fickle

Capital Flows are Fickle PDF Author: Mr.John C Bluedorn
Publisher: International Monetary Fund
ISBN: 1484311280
Category : Business & Economics
Languages : en
Pages : 38

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Book Description
Has the unprecedented financial globalization of recent years changed the behavior of capital flows across countries? Using a newly constructed database of gross and net capital flows since 1980 for a sample of nearly 150 countries, this paper finds that private capital flows are typically volatile for all countries, advanced or emerging, across all points in time. This holds true across most types of flows, including bank, portfolio debt, and equity flows. Advanced economies enjoy a greater substitutability between types of inflows, and complementarity between gross inflows and outflows, than do emerging markets, which reduces the volatility of their total net inflows despite higher volatility of the components. Capital flows also exhibit low persistence, across all economies and across most types of flows. Inflows tend to rise temporarily when global financing conditions are relatively easy. These findings suggest that fickle capital flows are an unavoidable fact of life to which policymakers across all countries need to continue to manage and adapt.

Global Capital Flows

Global Capital Flows PDF Author: Stephany Griffith-Jones
Publisher: Palgrave Macmillan
ISBN: 9780312215620
Category : Business & Economics
Languages : en
Pages : 206

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Book Description
Global Capital Flows examines the rapid growth and dramatic changes in capital flows globally and in emerging markets. In the context of relevant economic theory, it analyzes benefits and costs of large and volatile capital flows to developing countries; the latter include damaging currency crises in Mexico and East Asian economies. The book makes innovative proposals on how national governments--and especially--international organizations can best avoid such crises.