IMF Working Papers

Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors

By Leonardo Leiderman, Carmen Reinhart, Guillermo Calvo

August 1, 1992

Preview Citation

Format: Chicago

Leonardo Leiderman, Carmen Reinhart, and Guillermo Calvo. Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors, (USA: International Monetary Fund, 1992) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The characteristics of recent capital inflows into Latin America are discussed. It is argued that these inflows are partly explained by conditions outside the region, like recession in the United States and lower international interest rates. This suggests the possibility that a reversal of those conditions may lead to a future capital outflow, increasing the macroeconomic vulnerability of Latin American economies. Policy options are argued to be limited.

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

Keywords: Appreciation in Latin America, Balance of payments, Capital account, Capital gain, Capital inflows, Capital outflows, Central bank, Episode of reserves accumulation, External shock, Forecast error variance, Interest rate differential, International reserves, Nominal exchange rate, Real exchange rates, Reserves index, Secondary market, Terms of trade, Western Hemisphere, WP

Publication Details

  • Pages:

    66

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1992/062

  • Stock No:

    WPIEA0621992

  • ISBN:

    9781451964455

  • ISSN:

    1018-5941

Notes

Also published in Staff Papers, Vol. 40, No. 1, March 1993.

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