Capital Inflows and Balance of Payments Pressures: Tailoring Policy Responses in Emerging Market Economies
IMF Policy Discussion Papers, June 1, 2008
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Bibliographic details
- Authors: Bikas Joshi, Manuela Goretti, Uma Ramakrishnan, Alun H. Thomas, Atish R. Ghosh, Juan Zalduendo
- Published: June 1, 2008
- Series: IMF Policy Discussion Papers
- DOI: https://doi.org/10.5089/9781451945997.003
Authors and Publication
- By Bikas Joshi, Manuela Goretti, Uma Ramakrishnan, Alun H. Thomas, Atish R. Ghosh, Juan Zalduendo
- Publication date: June 1, 2008
- Series: Policy Discussion Paper No. 2008/002
- Issue: 002
- Volume: 2008
- Pages: 21
- DOI: https://doi.org/10.5089/9781451945997.003
- Stock No: PPIEA2008002
- ISBN: 9781451945997
- ISSN: 1564-5193
Executive Summary and Core Findings
- Although capital inflows are generally beneficial to recipient countries, they also pose a challenge for the conduct of economic policy.
- The paper proposes a conceptual taxonomy to guide the design of policy responses in the face of capital flows.
- Responses to capital surges should be differentiated based on the source of balance of payments pressures.
- An empirical examination finds some correspondence between policy choices in emerging market countries and the taxonomy's predictions, especially during periods of high global liquidity.
Conceptual Taxonomy (Policy Guidance)
- Classify balance of payments (BOP) pressures by their source to determine appropriate policy response.
- Tailor policy instruments to distinct types of inflows and BOP pressures rather than applying uniform measures.
Empirical Examination and Patterns
- The study examines whether emerging market policy choices conform to the taxonomy's predictions.
- Finds some correspondence between observed policy responses and taxonomy recommendations.
- Correspondence is stronger during periods of high global liquidity.
Subjects and Keywords (Topics Covered)
- Subjects: Balance of payments, Capital flows, Capital inflows, Current account balance, Current account deficits, Current account surpluses
- Keywords: appreciation, appreciation pressure, balance of payments, BOP pressure, capital flows, Capital inflows, current account, Current account balance, Current account deficits, Current account surpluses, East Asia, exchange rate, exchange rate appreciation, financing Needs, fiscal policy, fiscal policy measure, Global, Middle East, PDP, policy responses, surplus
Source: IMF Policy Discussion Papers — "Capital Inflows and Balance of Payments Pressures: Tailoring Policy Responses in Emerging Market Economies", Policy Discussion Paper No. 2008/002 (June 1, 2008).