Capital Inflow Surges in Emerging Economies: How Worried Should Latin America and the Caribbean Be? (original) (raw)
Related papers
Ride the Wild Surf: An Investigation of the Drivers of Surges in Capital Inflows
Policy Research Working Papers, 2014
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.
Volatile Capital Flows: Taming their Impact on Latin America
This book examines how large capital inflows should be managed in a volatile macroeconomic environment. Noted authorities on Latin America balance the lessons of Mexico's peso crisis with the argument that economic liberalization remains a valid long-term strategy.
Why Should Emerging-Market Countries (Still) Concern Themselves With Capital Inflows?
2007
This paper develops a simple analytic framework to analyze the effects of capital surges and sudden stops in the financial account of the balance of payments in emerging economies. In this model, capital inflows are largely exogenous to the recipient economies, they are very large when scaled to the size of the domestic financial sectors of recipients, and have large real effects. They also sow the seeds for the ensuing sudden stops, or capital flow reversals, observed in recent financial crises in emerging markets. Sudden stops can have devastating effects on output, growth, and employment. The paper goes on to test the main hypothesis derived from the model with an econometric analysis of capital surges and sudden stops using a panel-probit framework with heterogeneous unobserved country effects. While capital surges can be triggered by a number of domestic or foreign signals, the main variables that account for sudden stops are preceding capital surges, the size of the current ac...
Capital Inflows and Balance of Payments Pressures
IMF Policy Discussion Papers
This Policy Discussion Paper should not be reported as representing the views of the IMF. The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Policy Discussion Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. Although capital inflows are generally beneficial to recipient countries, they also pose a challenge for the conduct of economic policy. This paper proposes a conceptual taxonomy to guide the design of policy responses in the face of capital flows. We explore how responses to capital surges should be differentiated based on the source of balance of payments pressures. We also examine whether the policy choices in emerging market countries conform to the taxonomy's predictions and find some correspondence, especially during periods of high global liquidity.
1998
This paper provides a broad overview of the recent capital inflow episode experienced by a large group of developing countries. Drawing on prior work by the author, various characteristics of the recent capital inflow episode are reviewed, and the empirical literature on the factors driving capital inflows is surveyed, and the policy responses as well as macroeconomic outcomes in the recipient countries are examined. The paper draws lessons from experience for each of the various policy instruments that are available to cope with the macroeconomic implications of large capital inflows.