Capital flow management policies in emerging market economies: Are they successful in mitigating drastic changes of capital flows?

Hwang, Inbin; Park, Hyungsoon; Park, Sunyoung

doi:10.1002/ijfe.1629

Cited by 3 publications

(1 citation statement)

References 45 publications

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“…This implies that the non-tradable sector grows with an increasing inflow of FDI because the latter leads to RER appreciation, contingent on a high degree of financial openness. While capital flows are important for economic growth and investment, it is often considered crucial to have effective capital flow management policies in emerging markets (Hwang et al, 2018).…”

Section: Impacts Of Capital Flows On the Real Exchange Ratementioning

confidence: 99%

Exchange rate dynamics of emerging and developing economies: Not all capital flows are alike

Nguyen

Nasir

2022

Int. J Fin Econ

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The increasing cross-border capital flows have raised the question of whether capital inflows and outflows have different impacts on exchange rates in emerging markets than they do in developed markets and economies. To explore the potential heterogeneity in the impacts that can arise from the different types and directions of capital flows, we classify them according to whether they involve foreign direct investment (FDI) or foreign portfolio investment (FPI) and examine these inflows and outflows separately. The characteristics of these different types of capital flows and their effects on the real exchange rate in both advanced and emerging markets during 2002-2017 are investigated using a set of estimation approaches. To capture the relationship between real exchange rates and capital flows while controlling for other variables, a dynamic panel data model is utilized for the dataset covering emerging countries. Key findings suggest that the composition of capital flows determines the impact of those flows on real exchange rates, whereby FPI brings a faster appreciation of the real exchange rate than FDI and capital outflows bring a sharper degree of exchange rate adjustment than capital inflows. F20F30.

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Section: Impacts Of Capital Flows On the Real Exchange Ratementioning

confidence: 99%

Exchange rate dynamics of emerging and developing economies: Not all capital flows are alike

Nguyen

Nasir

2022

Int. J Fin Econ

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Managing capital flow reversals

Zehri

Ammar

2023

Economic and Political Studies

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IMF Advice on Capital Flows: How Well is it Supported by Empirical Evidence?

Montiel

2022

Journal of Globalization and Development

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The 1997–98 Asian financial crisis marked a turning point in the IMF’s previously negative views on the usefulness of capital account restrictions, culminating eventually in the publication of the Fund’s new Institutional View (IV) on the topic in 2012. The IV acknowledged that full capital account liberalization may not always be appropriate, accepted that new restrictions could at times have a useful role to play even in countries that had previously liberalized, and spelled out a specific set of circumstances under which the deploying of new restrictions could be justified as temporary measures in response to large capital flows. This paper documents the important role that empirical research, both by the profession at large as well as by the Fund’s own staff, played in supporting the first two components of the IV. It argues, however, that, empirical support is lacking with respect to the third component of the IV: the conditions under which the deployment of temporary capital account restrictions may be desirable. The conditions stipulated under the IV, which have the effect of considerably restricting the scope of circumstances in which the use of restrictions may be appropriate, are not fully justified by empirical evidence or recent experience and are best understood simply as a vestige of the institution’s pre-IV hostility to the use of restrictions.

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Capital flow management policies in emerging market economies: Are they successful in mitigating drastic changes of capital flows?

Cited by 3 publications

References 45 publications

Exchange rate dynamics of emerging and developing economies: Not all capital flows are alike

Exchange rate dynamics of emerging and developing economies: Not all capital flows are alike

Managing capital flow reversals

IMF Advice on Capital Flows: How Well is it Supported by Empirical Evidence?

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