› › The New Economics Of Capital Controls Imposed For Prudential Reasons L4888

The New Economics of Capital Controls Imposed for Prudential Reasons+L4888

Author : Mr.Anton Korinek

Publisher : International Monetary Fund

Page : 38 pages

File Size : 25,24 MB

Release : 2011-12-01

Category : Business & Economics

ISBN : 1463927843

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Book Description

This paper provides an introduction to the new economics of prudential capital controls in emerging economies. This literature is based on the notion that there are externalities associated with financial crises because individual market participants do not internalize their contribution to aggregate financial instability when they make their finacing decisions. As a result they impose externalities in the form of greater financial instability on each other, and the private financing decisions of individuals are distorted towards excessive risk-taking. We discuss how prudential capital controls can induce private agents to internalize these externalities and thereby increase macroeconomic stability and enhance welfare.



Capital Controls

Author : Jonathan David Ostry

Publisher :

Page : 0 pages

File Size : 29,20 MB

Release : 2015

Category : Capital market

ISBN : 9781783479498

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Book Description

The global financial crisis and its aftermath saw boom-bust cycles in cross-border capital flows of astounding magnitude. Issues of capital account liberalization and the imposition of capital controls are back in the headlines, and on researchers' agendas. This comprehensive and timely volume is the first collection of influential papers by leading scholars in the field that is representative of the various debates on this topic, and illustrative of how thinking and research have evolved.



Reaping the Benefits of Financial Globalization

Author : Mr.Ayhan Kose

Publisher : International Monetary Fund

Page : 46 pages

File Size : 22,11 MB

Release : 2008-12-16

Category : Business & Economics

ISBN : 1589067487

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Book Description

Financial globalization has increased dramatically over the past three decades, particularly for advanced economies, while emerging market and developing countries experienced more moderate increases. Divergences across countries stem from different capital control regimes, and factors such as institutional quality and domestic financial development. Although, in principle, financial globalization should enhance international risk sharing, reduce macroeconomic volatility, and foster economic growth, in practice its effects are less clear-cut. This paper envisages a gradual and orderly sequencing of external financial liberalization and complementary reforms in macroeconomic policy framework as essential components of a successful liberalization strategy.



Surges

Author : Mr.Atish R. Ghosh

Publisher : International Monetary Fund

Page : 43 pages

File Size : 42,21 MB

Release : 2012-01-01

Category : Business & Economics

ISBN : 1463942303

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Book Description

This paper examines why surges in capital flows to emerging market economies (EMEs) occur, and what determines the allocation of capital across countries during such surge episodes. We use two different methodologies to identify surges in EMEs over 1980-2009, differentiating between those mainly caused by changes in the country's external liabilities (reflecting the investment decisions of foreigners), and those caused by changes in its assets (reflecting the decisions of residents). Global factors-including US interest rates and risk aversion¡-are key to determining whether a surge will occur, but domestic factors such as the country's external financing needs (as implied by an intertemporal optimizing model of the current account) and structural characteristics also matter, which explains why not all EMEs experience surges. Conditional on a surge occurring, moreover, the magnitude of the capital inflow depends largely on domestic factors including the country's external financing needs, and the exchange rate regime. Finally, while similar factors explain asset- and liability-driven surges, the latter are more sensitive to global factors and contagion.



Inefficient Credit Booms

Author : Guido Lorenzoni

Publisher :

Page : 60 pages

File Size : 50,65 MB

Release : 2007

Category : Credit

ISBN :

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Book Description

This paper studies the welfare properties of competitive equilibria in an economy with financial frictions hit by aggregate shocks. In particular, it shows that competitive financial contracts can result in excessive borrowing ex ante and excessive volatility ex post. Even though, from a first-best perspective the equilibrium always displays under-borrowing, from a second-best point of view excessive borrowing can arise. The inefficiency is due to the combination of limited commitment in financial contracts and the fact that asset prices are determined in a spot market. This generates a pecuniary externality that is not internalized in private contracts. The model provides a framework to evaluate preventive policies which can be used during a credit boom to reduce the expected costs of a financial crisis.



Targeting the Real Exchange Rate

Author : Mr.Guillermo Calvo

Publisher : International Monetary Fund

Page : 50 pages

File Size : 25,41 MB

Release : 1994-02-01

Category : Business & Economics

ISBN : 1451921217

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Book Description

This paper presents a theoretical and empirical analysis of policies aimed at setting a more depreciated level of the real exchange rate. An intertemporal optimizing model suggests that, in the absence of changes in fiscal policy, a more depreciated level of the real exchange can only be attained temporarily. This can be achieved by means of higher inflation and/or higher real interest rates, depending on the degree of capital mobility. Evidence for Brazil, Chile, and Colombia supports the model’s prediction that undervalued real exchange rates are associated with higher inflation.





Managing Capital Flows

Author : Masahiro Kawai

Publisher : Edward Elgar Publishing

Page : 465 pages

File Size : 13,79 MB

Release : 2010-01-01

Category : Business & Economics

ISBN : 184980687X

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Book Description

Managing Capital Flows provides analyses that can help policymakers develop a framework for managing capital flows that is consistent with prudent macroeconomic and financial sector stability. While capital inflows can provide emerging market economies with invaluable benefits in pursuing economic development and growth, they can also pose serious policy challenges for macroeconomic management and financial sector supervision. The expert contributors cover a wide range of issues related to managing capital flows and analyze the experience of emerging Asian economies in dealing with surges in capital inflows. They also discuss possible policy measures to manage capital flows while remaining consistent with the goals of macroeconomic and financial sector stability. Building on this analysis, the book presents options for workable national policies and regional policy cooperation, particularly in exchange rate management. Containing chapters that bring in international experiences relevant to Asia and other emerging market economies, this insightful book will appeal to policymakers in governments and financial institutions, as well as public and private finance experts. It will also be of great interest to advanced students and academic researchers in finance.