International Capital Flow Reversals

Abstract

work is licensed under a Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives (CC-IGO BY-NC-ND 3.0 IGO) license (http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ legalcode) and may be reproduced with attribution to the IDB and for any non-commercial purpose, as provided below. No derivative work is allowed.Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC-IGO license. Abstract *Sudden stops in capital flows are a form of financial whiplash that creates instability in the affected economies. The spark that ignites sudden stops originates in the supply of foreign financing that can halt for reasons that may be unrelated to the affected country's domestic conditions. Yet a spark cannot generate a fire unless combustible materials are available. Those materials are the domestic macroeconomic fundamentals that make some countries more vulnerable than others. Higher fiscal deficits, larger current account deficits, and higher levels of foreign currency debts in the domestic financial system are manifestations of weak fundamentals that increase vulnerability. On the flip side, international reserves provide buffers that can help countries offset the risks. While it may be impossible for countries to completely insulate themselves from the volatility of capital flows, the choice of antidotes to prevent that volatility from forcing potentially costly external adjustments is in their own hands. JEL classifications: F30, F32, F40

An Evaluation of the Impact of Monetary Easing Policies in Times of a Pandemic

“…The economic term' sudden stops' was coined with the abrupt drying up of capital inflows during the Mexican crisis of 1994. The phrase was then referred in many following crises like an Argentine crisis (1995), Russian crisis (1998), the Brazilian crisis (1999), and others ( 8 ). Sudden stops are often associated with currency crashes as it results in the fall of the foreign exchange rate.…”

Covid-19 Pandemi̇si̇ni̇n Uluslararasi Sermaye Hareketli̇li̇ği̇ Üzeri̇ne Etki̇si̇: Türki̇ye Örneği̇

“…Ödemeler dengesinde cari hesaplar ile mali hesaplar arasındaki yakın ilişkiden dolayı sermaye akışlarındaki ani duruşlar cari işlemler açığı ya da fazlasıyla yakından ilgilidir (Cavallo, 2019). Ani duruşlar sonrasında toplam talep ve toplam harcamalarda meydana gelen değişiklikler, cari açıkta tersine dönüşe ve reel döviz kurlarında bir artışa yol açabilmektedir.…”