Capital Inflows and Balance of Payments Pressures: Tailoring Policy Responses in Emerging Market Economies
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Summary:
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.
Series:
Policy Discussion Paper No. 2008/002
Subject:
Balance of payments Capital flows Capital inflows Current account balance Current account deficits Current account surpluses
Frequency:
Quarterly
English
Publication Date:
June 1, 2008
ISBN/ISSN:
9781451945997/1564-5193
Stock No:
PPIEA2008002
Pages:
21
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