Capital Flows Exchange Rate Flexibility And The Real Exchange Rate

Author : Mr.Tidiane Kinda,Jean-Louis Combes,Patrick Plane
Publisher : International Monetary Fund
Page : 35 pages
File Size : 51,9 Mb
Release : 2011-01-01
Category : Business & Economics
ISBN : 9781455211876

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Capital Flows, Exchange Rate Flexibility, and the Real Exchange Rate by Mr.Tidiane Kinda,Jean-Louis Combes,Patrick Plane Pdf

This paper analyzes the impact of capital inflows and exchange rate flexibility on the real exchange rate in developing countries based on panel cointegration techniques. The results show that public and private flows are associated with a real exchange rate appreciation. Among private flows, portfolio investment has the highest appreciation effect-almost seven times that of foreign direct investment or bank loans-and private transfers have the lowest effect. Using a de facto measure of exchange rate flexibility, we find that a more flexible exchange rate helps to dampen appreciation of the real exchange rate stemming from capital inflows.

Author : Rebecca Driver,Peter J N Sinclair,Christoph Thoenissen
Publisher : Routledge
Page : 456 pages
File Size : 41,6 Mb
Release : 2013-04-15
Category : Business & Economics
ISBN : 9781134261970

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Exchange Rates, Capital Flows and Policy by Rebecca Driver,Peter J N Sinclair,Christoph Thoenissen Pdf

Combining thorough scholarship with illuminating real-world examples, this edited collection provides insights on the causes and consequences of movements in both exchange rates and external assets and has a strong focus on the policy implications of operating in an open economy, particularly the choice of exchange rate and monetary policy, exchange rate intervention and policies on capital mobility.

Author : Mr.Nicolas E. Magud,Mr.Esteban Vesperoni
Publisher : International Monetary Fund
Page : 30 pages
File Size : 47,9 Mb
Release : 2014-04-16
Category : Business & Economics
ISBN : 9781475543735

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Exchange Rate Flexibility and Credit during Capital Inflow Reversals by Mr.Nicolas E. Magud,Mr.Esteban Vesperoni Pdf

We document the behavior of macro and credit variables during episodes of capital inflows reversals in economies with different degrees of exchange rate flexibility. We find that exchange rate flexibility is associated with milder credit growth during the boom but, even though smaller than in more rigid regimes, it cannot shield the economy from a credit reversal. Furthermore, we observe what we dub as a recovery puzzle: credit growth in economies with more flexible exchange rate regimes remains tepid well after the capital flow reversal takes place. This results stress the complementarity of macro-prudential policies with the exchange rate regime. More flexible regimes could help smoothing the credit cycle through capital surchages and dynamic provisioning that build buffers to counteract the credit recovery puzzle. In contrast, more rigid exchange rate regimes would benefit the most from measures to contain excessive credit growth during booms, such as reserve requirements, loan-to-income ratios, and debt-to-income and debt-service-to-income limits.

Author : Mr.Nicolas E. Magud,Ms.Carmen Reinhart,Mr.Esteban Vesperoni
Publisher : International Monetary Fund
Page : 24 pages
File Size : 52,7 Mb
Release : 2012-02-01
Category : Business & Economics
ISBN : 9781463936426

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Capital Inflows, Exchange Rate Flexibility, and Credit Booms by Mr.Nicolas E. Magud,Ms.Carmen Reinhart,Mr.Esteban Vesperoni Pdf

The prospects of expansionary monetary policies in the advanced countries for the foreseeable future have renewed the debate over policy options to cope with large capital inflows that are, at least partly, driven by low interest rates in the financial centers. Historically, capital flow bonanzas have often fueled sharp credit expansions in advanced and emerging market economies alike. Focusing primarily on emerging markets, we analyze the impact of exchange rate flexibility on credit markets during periods of large capital inflows. We show that bank credit grows more rapidly and its composition tilts to foreign currency in economies with less flexible exchange rate regimes, and that these results are not explained entirely by the fact that the latter attract more capital inflows than economies with more flexible regimes. Our findings thus suggest countries with less flexible exchange rate regimes may stand to benefit the most from regulatory policies that reduce banks' incentives to tap external markets and to lend/borrow in foreign currency; these policies include marginal reserve requirements on foreign lending, currency-dependent liquidity requirements, and higher capital requirement and/or dynamic provisioning on foreign exchange loans.

Author : Mr.Alexander W. Hoffmaister,Pierre-Richard Agénor
Publisher : International Monetary Fund
Page : 50 pages
File Size : 42,9 Mb
Release : 1996-12-01
Category : Business & Economics
ISBN : 9781451855876

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Capital Inflows and the Real Exchange Rate by Mr.Alexander W. Hoffmaister,Pierre-Richard Agénor Pdf

This paper examines the links between capital inflows and the real exchange rate under pegged exchange rates. The analytical framework is described, and a near-VAR model linking capital inflows, interest rate differentials, government spending, money base velocity, and the temporary component of the real exchange rate (TCRER) is estimated for Korea, Mexico, the Philippines, and Thailand. TCRER movements are associated only weakly with shocks to capital flows. Negative shocks to U.S. interest rates lead to capital inflows in Asia and a TCRER appreciation in the Philippines and Thailand. Positive shocks to government spending have a small but statistically significant effect on the TCRER for Korea.

Author : Mrs.Gilda Fernandez,Mr.Cem Karacadag,Rupa Duttagupta
Publisher : International Monetary Fund
Page : 29 pages
File Size : 51,9 Mb
Release : 2006-01-09
Category : Business & Economics
ISBN : 9781589064768

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Moving to a Flexible Exchange Rate by Mrs.Gilda Fernandez,Mr.Cem Karacadag,Rupa Duttagupta Pdf

A growing number of countries are adopting flexible exchange rate regimes because flexibility offers more protection against external shocks and greater monetary independence. Other countries have made the transition under disorderly conditions, with the sharp depreciation of their currency during a crisis. Regardless of the reason for adopting a flexible exchange rate, a successful transition depends on the effective management of a number of institutional and operational issues. The authors of this Economic Issue describe the necessary ingredients for moving to a flexible regime, as well as the optimal pace and sequencing under different conditions.

Author : Reuven Glick
Publisher : Cambridge University Press
Page : 148 pages
File Size : 44,6 Mb
Release : 1998-06-13
Category : Business & Economics
ISBN : 0521623235

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Managing Capital Flows and Exchange Rates by Reuven Glick Pdf

"This is a very timely book that brings the reader to the forefront of current research on macroeconomic policy issues in economies subject to sizable capital flows".--Guillermo A. Calvo, University of Maryland.

Author : Mrs.Gilda Fernandez,Mr.Cem Karacadag,Rupa Duttagupta
Publisher : International Monetary Fund
Page : 40 pages
File Size : 42,5 Mb
Release : 2004-07-01
Category : Business & Economics
ISBN : 9781451854930

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From Fixed to Float by Mrs.Gilda Fernandez,Mr.Cem Karacadag,Rupa Duttagupta Pdf

This paper identifies the institutional and operational requisites for transitions to floating exchange rate regimes. In particular, it explores key issues underlying the transition, including developing a deep and liquid foreign exchange market, formulating intervention policies consistent with the new regime, establishing an alternative nominal anchor in the context of a new monetary policy framework, and building the capacity of market participants to manage exchange rate risks and of supervisory authorities to regulate and monitor them. It also assesses the factors that influence the pace of exit and the appropriate sequencing of exchange rate flexibility and capital account liberalization.

Author : George Fane
Publisher : Edward Elgar Publishing
Page : 238 pages
File Size : 52,5 Mb
Release : 2000-01-01
Category : Business & Economics
ISBN : 1781957967

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Capital Mobility, Exchange Rates, and Economic Crises by George Fane Pdf

If flexible exchange rates are not adopted, central banks should at least avoid the widespread practice of trying to sterilise the monetary effects of capital flows." "The author argues that the implementation of this plan will be a far more effective way of enhancing financial stability than controlling international capital flows, or trying to force private lenders to make new loans to countries that suffer crises."--BOOK JACKET.

Author : Anne O. Krueger
Publisher : Cambridge University Press
Page : 236 pages
File Size : 50,7 Mb
Release : 1983-03-31
Category : Business & Economics
ISBN : 0521273013

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Exchange-Rate Determination by Anne O. Krueger Pdf

This volume provides a survey of thought about exchange-rate determination as it emerged in the 1970s.

Author : Edward Tower,Thomas D. Willett
Publisher : Unknown
Page : 132 pages
File Size : 41,7 Mb
Release : 1976
Category : Business & Economics
ISBN : UCSC:32106009046795

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The Theory of Optimum Currency Areas and Exchange-rate Flexibility by Edward Tower,Thomas D. Willett Pdf

Author : Ms.Inci Ötker
Publisher : International Monetary Fund
Page : 94 pages
File Size : 50,9 Mb
Release : 2007-04-30
Category : Business & Economics
ISBN : 9781589066243

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Moving to Greater Exchange Rate Flexibility by Ms.Inci Ötker Pdf

Many countries have moved towards more flexible exchange rate regimes over the last decade to take advantage of greater monetary policy autonomy and flexibility in responding to external shocks. Some reluctance to let go of pegged exchange rates persists, however, despite the benefits of flexibility. The institutional and operational requirements needed to support a floating exchange rate, as well as difficulties in assessing the right time and manner to exit, tend to be additional factors in this reluctance. This volume presents the concrete steps taken by a number of countries in transition to greater exchange rate flexibility and elaborates on the operational ingredients that proved helpful in promoting successful and durable transitions. It attempts to provide a better understanding (and hence a "road map") of how these various operational ingredients were established and coordinated, how their implementation interacted with macro and other conditions, and how they contributed to the smoothness of each transition.

Author : Mr.Alejandro Lopez Mejia
Publisher : International Monetary Fund
Page : 55 pages
File Size : 52,5 Mb
Release : 1999-02-01
Category : Business & Economics
ISBN : 9781451843514

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Large Capital Flows by Mr.Alejandro Lopez Mejia Pdf

This paper reviews the causes, consequences, and policy responses to large capital flows in several emerging markets. It opens by studying recent patterns of capital flows, and then discusses the causes of capital flows. Emphasis is given to the reasons behind the capital inflow episode in the 1990s, the major reversals, and the volatility observed in these flows. The paper goes on to examine the consequences of capital inflows and the pros and cons of alternative policy responses. It concludes with policy lessons derived from country experiences.

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 26 pages
File Size : 55,5 Mb
Release : 2000-04-01
Category : Business & Economics
ISBN : 9781451974119

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Exchange Rate Regimes in Selected Advanced Transition Economies by International Monetary Fund Pdf

Since beginning economic transition, the Czech Republic, Estonia, Hungary, Poland, and Slovenia have—with much success—employed diverse exchange rate regimes. As these countries approach EU accession, they will need to avoid the perils of too much or too little exchange rate variability when capital flows are likely to be large and volatile; narrow band arrangements in particular could be problematic. The exception is Estonia, where there are good arguments for retaining the currency board arrangement. Countries wishing to join the euro area at an early stage should not leave the removal of remaining capital controls to the last minute.

Author : Suiwah Leung
Publisher : Australian National University, Research School of Social Sciences
Page : 44 pages
File Size : 47,8 Mb
Release : 1996
Category : Capital movements
ISBN : UCSD:31822023593304

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Capital Flows, Monetary Policy and Exchange Rates in the Asian Region by Suiwah Leung Pdf

Booklet examining the responses of several Asian countries to recent surges in capital inflows. Examines the difficulties faced by these countries in trying to maintain pegged exchange rates and monetary independence.