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Surging Capital Flows to Emerging Asia: Facts, Impacts, and Responses

Author/Editor: Balakrishnan, Ravi | Nowak, Sylwia | Panth, Sanjaya | Wu, Yiqun
Authorized for Distribution: May 1, 2012
Electronic Access: Free Full Text (PDF file size is 2,567KB)
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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: Net capital flows to emerging Asia rebounded at a record pace following the global financial crisis, raising concerns about overheating and financial stability. This paper documents the size and composition of the most recent surge to Asian emerging markets from a historical perspective and compares developments in the broader economy, asset prices, and corporate variables across the different episodes of strong inflows. We find little evidence of a significant build-up of imbalances and resource misallocation during the most recent surge. We also review country experiences in managing the risks associated with inflows and argue that Asian countries have used regulatory measures during past surges, although there is not strong evidence of their efficacy without supporting monetary and fiscal policies.
 
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Series: Working Paper No. 12/130
Subject(s): Asia | Capital flows | Capital inflows | Cross country analysis | Emerging markets | Fiscal risk | Risk management | Stabilization measures
Author's keyword(s): Asia; capital inflows; macroprudential policy
 
English  
    Published:   May 1, 2012        
            Format:   Paper
    Stock No:   WPIEA2012130   Pages:   27
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
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