Capital Flows in Central and Eastern Europe: Evidence and Policy Options

ByCarlos A. Végh Gramont, Ratna Sahay, Guillermo Calvo

June 1, 1995

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

This paper examines the nature and composition of capital flows in selected countries in Central and Eastern Europe during 1987–93. The data show that there was a remarkable turnaround in the capital account in 1992–93. This improvement was accompanied by widening current account deficits, an increase in real consumption, and real exchange rate appreciation. In light of these developments, the paper discusses the main macroeconomic concerns raised by capital inflows and lays out the principal policy options relevant for the transition economies.

Subject: Balance of payments, Capital account, Capital flows, Capital inflows, External debt, Foreign exchange, Real exchange rates

Keywords: Asia and Pacific, Capital account, Capital flows, Capital inflows, Central and Eastern Europe, central bank, Eastern Europe, economic system, excess reserves, interest rate, monetary aggregate, nominal exchange rate, price level, Real exchange rates, transition economy, WP

Pages:
48
Volume:
1995
DOI:
https://doi.org/10.5089/9781451847741.001
Issue:
057
Series:
Working Paper No. 1995/057
Stock No:
WPIEA0571995
ISBN:
9781451847741
ISSN:
1018-5941

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Notes

Prepared for a seminar on "Western Europe in Transition: The Impact of Opening Up of Eastern Europe and the Former Soviet Union," organized by the Bank of Italy, Austrian National Bank, and the IMF held in Trieste, October 10-11, 1994.

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