Managing Capital Flows: Macroeconomic Analysis and Policies (MCF)

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The course is devoted to fostering understanding of the dynamics of capital flows and their effects on economic growth, macroeconomic volatility, and risk of crisis.
Discusses policy options available to reap the benefits of capital market integration while minimizing and mitigating its adverse effects.
Begins with a refresher on balance of payments statistics and a description of alternative measures of capital flows and financial (capital) account openness.
Introduces the determinants of capital flows and the link between these flows and economic growth, macroeconomic volatility, and crisis risk.
Concludes with a discussion of capital account management tools and how they relate to financial regulation and exchange rate intervention.
Includes case studies of actual crises to illustrate how policy setting and failure to recognize and address the buildup of vulnerabilities led to crisis.
Emphasizes participant engagement through discussions and practical workshop exercises to solidify understanding of lecture material.

Explain the dynamics of the capital account using the balance of payments of a given country.
Identify the financial and economic risks that a global capital market creates for both small and large economies.
Determine what challenges a country faces in attempting to stabilize the economy under different economic scenarios.
Identify how policy actions can influence or prevent the occurrence of capital account crises.
Evaluate the impact of financial reform policies on both economic growth and the risk of financial crisis.
Identify a capital account crisis and assess the associated costs.
Propose policy actions to address or avoid future crises and reduce their costs.