The Capital Inflows Problem: Concepts and Issues
IMF Policy Discussion Papers, August 1, 1993
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Bibliographic details
- Authors: Carmen Reinhart, Leonardo Leiderman, Guillermo Calvo
- Published: August 1, 1993
- Series: IMF Policy Discussion Papers
- DOI: https://doi.org/10.5089/9781451969931.003
Summary
- Since 1990 capital has started to move from industrial countries to developing regions like Latin America, the Middle East and parts of Asia.
- Reentry into international capital markets is a welcome turn of events for most countries.
- Capital inflows are often associated with inflationary pressures, a real exchange rate appreciation, a deterioration in the current account, and a boom in bank lending.
- The paper examines how these inflows have altered the macroeconomic environment in a number of Asian and Latin American countries and discusses the pros and cons of a menu of policy options.
Key Findings and Observations
- Study based on data from ten Latin American countries and eight Asian countries.
- Typical macroeconomic associations with capital inflows identified:
- inflationary pressures
- real exchange rate appreciation
- deterioration in the current account
- boom in bank lending
Policy Options and Assessment
- The paper discusses a menu of policy options, weighing pros and cons (specific options and assessments are contained in the full paper).
Subject Areas and Keywords
- Subject: Balance of payments, Capital account, Capital flows, Capital inflows, Central banks, Foreign exchange, International reserves, Real exchange rates
- Keywords: appreciation, Asia, Asia and Pacific, Capital account, capital account surplus, Capital flows, Capital inflows, decreasing returns, deposit requirements, exchange rate volatility, group, hot money, interest rate, International reserves, nominal exchange rate, PDP, rate of return, real exchange rate appreciation, Real exchange rates, resource allocation, Southeast Asia