Capital Inflows and Real Exchange Rate Appreciation in Latin America
Author: Guillermo A. Calvo
Publisher:
Published: 1992
Total Pages: 70
ISBN-13:
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Currencies, Capital Flows and Crises
Author: John T. Harvey
Publisher: Routledge
Published: 2009-01-13
Total Pages: 197
ISBN-13: 1135969094
DOWNLOAD EBOOKBreaking from conventional wisdom, this book provides an explanation of exchange rates based on the premise that it is financial capital flows and not international trade that represents the driving force behind currency movements. John T. Harvey combines analyses rooted in the scholarly traditions of John Maynard Keynes and Thorstein Veblen with that of modern psychology to produce a set of new theories to explain international monetary economics, including not only exchange rates but also world financial crises. In the book, the traditional approach is reviewed and critiqued and the alternative is then built by studying the psychology of the market and balance of payments questions. The central model has at its core Keynes’ analysis of the macroeconomy and it assumes neither full employment nor balanced trade over the short or long run. Market participants’ mental model, which they use to forecast future exchange rate movements, is specified and integrated into the explanation. A separate but related discussion of currency crises shows that three distinct tension points emerge in booming economies, any one of which can break and signal the collapse. Each of the models is compared to post-Bretton Woods history and the reader is shown exactly how various shifts and adjustments on the graphs can explain the dollar’s ups and downs and the Mexican (1994) and Asian (1987) crises.
Capital Inflows and the Real Exchange Rate
Author: Christian Saborowski
Publisher: International Monetary Fund
Published: 2009-01-01
Total Pages: 44
ISBN-13: 1451871678
DOWNLOAD EBOOKThis paper argues that, in improving the efficient allocation of resources, financial sector development could dampen the appreciation effect of capital inflows. Using dynamic panel data techniques, the paper finds that the exchange rate appreciation effect of FDI inflows is indeed attenuated when financial and capital markets are larger and more active. The main implication of these results is that one of the main dangers associated with large capital inflows in emerging markets-the destabilization of macroeconomic management due to a sizeable appreciation of the real exchange rate-can be mitigated partly by developing a deep financial sector.
Policy Responses to Capital Flows in Emerging Markets
Author: Mahmood Pradhan
Publisher: International Monetary Fund
Published: 2011-04-20
Total Pages: 45
ISBN-13: 1463935129
DOWNLOAD EBOOKStaff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.
Capital Inflows and the Real Exchange Rate
Author: Mr.Alexander W. Hoffmaister
Publisher: International Monetary Fund
Published: 1996-12-01
Total Pages: 50
ISBN-13: 1451855877
DOWNLOAD EBOOKThis paper examines the links between capital inflows and the real exchange rate under pegged exchange rates. The analytical framework is described, and a near-VAR model linking capital inflows, interest rate differentials, government spending, money base velocity, and the temporary component of the real exchange rate (TCRER) is estimated for Korea, Mexico, the Philippines, and Thailand. TCRER movements are associated only weakly with shocks to capital flows. Negative shocks to U.S. interest rates lead to capital inflows in Asia and a TCRER appreciation in the Philippines and Thailand. Positive shocks to government spending have a small but statistically significant effect on the TCRER for Korea.
Managing Capital Flows
Author: Masahiro Kawai
Publisher: Edward Elgar Publishing
Published: 2010-01-01
Total Pages: 465
ISBN-13: 184980687X
DOWNLOAD EBOOKManaging 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.
Fiscal Imbalances, Capital Inflows, and the Real Exchange Rate
Author: E. Murat Ucer
Publisher: International Monetary Fund
Published: 1997-01-01
Total Pages: 31
ISBN-13: 1451841590
DOWNLOAD EBOOKThis paper examines the links between fiscal policy, capital inflows, and the real exchange rate in Turkey since the late 1980s. After an overview of recent macroeconomic developments in Turkey, a vector autoregression model is estimated linking government spending, interest rate differentials, capital inflows, and the temporary component of the real exchange rate. Positive shocks to government spending and capital inflows lead to an appreciation of the temporary component of the real exchange rate, whereas positive shocks to the uncovered interest rate differential lead to a capital inflow and an appreciation of the temporary component of the real exchange rate. The findings highlight the role of fiscal adjustment in restoring macroeconomic stability.
Exchange Rate Misalignment in Developing Countries
Author: Sebastian Edwards
Publisher: Johns Hopkins University Press
Published: 1988
Total Pages: 110
ISBN-13:
DOWNLOAD EBOOKThis article analyzes the theory of equilibrium real exchange rates and defines misalignment as a deviation of the real exchange rate (RER) from its equilibrium level. The role of macroeconomic policies is then analyzed under three alternative nominal exchange rate regimes: predetermined nominal exchange rates; floating nominal rates; and dual or black market nominal exchange rates. This discussion points out how inconsistent macroeconomic policies often lead to real exchange rate misalignment. Corrective measures, including nominal devaluation and several alternative approaches, are then evaluated.
Capital Flows, Exchange Rate Flexibility, and the Real Exchange Rate
Author: Mr.Tidiane Kinda
Publisher: International Monetary Fund
Published: 2011-01-01
Total Pages: 35
ISBN-13: 1455211877
DOWNLOAD EBOOKThis paper analyzes the impact of capital inflows and exchange rate flexibility on the real exchange rate in developing countries based on panel cointegration techniques. The results show that public and private flows are associated with a real exchange rate appreciation. Among private flows, portfolio investment has the highest appreciation effect-almost seven times that of foreign direct investment or bank loans-and private transfers have the lowest effect. Using a de facto measure of exchange rate flexibility, we find that a more flexible exchange rate helps to dampen appreciation of the real exchange rate stemming from capital inflows.
Managing Capital Flows and Exchange Rates
Author: Reuven Glick
Publisher: Cambridge University Press
Published: 1998-06-13
Total Pages: 148
ISBN-13: 9780521623230
DOWNLOAD EBOOKThe essays in this volume examine the theoretical and policy issues associated with international capital flows and exchange rates for emerging markets in the Pacific Basin region. Emerging market countries in both Asia and Latin America offer a wide variety of examples for the comparative study of the implications of international capital flow surges and appropriate policy responses. The essays address four broad issues. First, they investigate the determinants of international capital flows, particularly the relative role of domestic and external factors in driving capital flows. Second, they inquire how predictable and contagious capital flow reversals and exchange rate crises are. Third, they explore what the domestic economic effects of capital inflows on emerging economies have been, and finally seek to suggest what are the appropriate responses by policymakers to capital inflow surges.
