The Capital Inflows Problem: Concepts and Issues

By Carmen Reinhart, Leonardo Leiderman, Guillermo Calvo

August 1, 1993

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Carmen Reinhart, Leonardo Leiderman, and Guillermo Calvo. The Capital Inflows Problem: Concepts and Issues, (USA: International Monetary Fund, 1993) accessed November 23, 2024

Summary

Since 1990 capital has started to move from industrial countries to developing regions like Latin America, the Middle East and parts of Asia. Reentry into international capital markets is a welcome turn of events for most countries. However, capital inflows are often associated with inflationary pressures, a real exchange rate appreciation, a deterioration in the current account, and a boom in bank lending. This paper briefly examines how these inflows have altered the macroeconomic environment in a number of Asian and Latin American countries. The pros and cons of a menu of policy options are discussed.

Subject: Balance of payments, Capital account, Capital flows, Capital inflows, Central banks, Foreign exchange, International reserves, Real exchange rates

Keywords: Appreciation, Asia, Asia and Pacific, Capital account, Capital account surplus, Capital flows, Capital inflows, Decreasing returns, Deposit requirements, Exchange rate volatility, Group, Hot money, Interest rate, International reserves, Nominal exchange rate, PDP, Rate of return, Real exchange rate appreciation, Real exchange rates, Resource allocation, Southeast Asia

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Policy Discussion Paper No. 1993/010
Stock No:

PPIEA0101993
ISBN:

9781451969931
ISSN:

1564-5193

Notes

Study based on data from ten Latin American countries and eight Asian countries.

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