Download or read book Findings of the Recent Literature on International Capital Flows written by Stéphanie Guichard and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book International Capital Flows Economic Problems and Policy Implications written by Nina Pohl and published by diplom.de. This book was released on 2000-09-01 with total page 207 pages. Available in PDF, EPUB and Kindle. Book excerpt: Inhaltsangabe:Abstract: This paper deals with three highly controversial aspects in the international finance literature: the degree of international financial integration, the economic impact of capital mobility, and the potential role of capital controls in the emerging international financial architecture. Regarding the first aspect, many observers have been influenced by the recent hype about globalisation and in fact take it for granted that capital markets have become almost fully integrated into a world financial marketplace. This paper, reviews evidence that challenges this conventional wisdom, though confirming that the degree of international financial integration is rising. With respect to the second aspect, it is demonstrated that there are circumstances under which the free flow of international capital could negatively impact upon economic performance and/or otherwise welfare-enhancing domestic policies. This finding conflicts with traditional theory and provides an economic rationale for the judicious introduction of capital controls. With this assertion in mind, the final aspect, the role of capital controls, is investigated. The specific question explored is how far restrictions on international capital flows are able to avert a costly economic imbalance arising from fluctuations in the balance of payments. Although the international consensus seems to have shifted in recent years towards promoting Chilean-style capital controls as a potential new building block in the international financial landscape, this paper cautions against such a generalisation of the Chilean experience. Rather, a review of the empirical literature suggests that much of Chile s economic success story in the last decade can be explained by factors other than its control regime. The rising degree of international financial integration enhances the need for small countries to resolve their dilemma of being dependent on external funding and, at the same time, most vulnerable to sudden reversals of international capital flows. Yet, simple solutions of how to counterbalance the potential threats of capital mobility in a second-best equilibrium, are not found to be easily forthcoming. In particular, this paper argues that capital controls are no panacea even less so, if they delay necessary macro- and microeconomic reforms. A worrying feature of the international financial system, partly due to continued innovations in financial engineering, is that [...]

Download or read book International Capital Flows Economic Impact and Policy Implications written by Nina Gillmann and published by GRIN Verlag. This book was released on 2012-08-08 with total page 213 pages. Available in PDF, EPUB and Kindle. Book excerpt: Diploma Thesis from the year 2000 in the subject Economics - Finance, grade: 1, Christian-Albrechts-University of Kiel, language: English, abstract: This paper deals with three highly controversial aspects in the international finance literature: the degree of international financial integration, the economic impact of capital mobility, and the potential role of capital controls in the emerging international financial architecture. Regarding the first aspect, many observers have been influenced by the recent hype about “globalisation” and in fact take it for granted that capital markets have become almost fully integrated into a world financial marketplace. This paper, reviews evidence that challenges this conventional wisdom, though confirming that the degree of international financial integration is rising. With respect to the second aspect, it is demonstrated that there are circumstances under which the free flow of international capital could negatively impact upon economic performance and/or otherwise welfare-enhancing domestic policies. This finding conflicts with traditional theory and provides an economic rationale for the judicious introduction of capital controls. With this assertion in mind, the final aspect, the role of capital controls, is investigated. The specific question explored is how far restrictions on international capital flows are able to avert a costly economic imbalance arising from fluctuations in the balance of payments. Although the international consensus seems to have shifted in recent years towards promoting Chilean-style capital controls as a potential new building block in the international financial landscape, this paper cautions against such a generalisation of the Chilean experience. Rather, a review of the empirical literature suggests that much of Chile‘s economic success story in the last decade can be explained by factors other than its control regime. The rising degree of international financial integration enhances the need for small countries to resolve their dilemma of being dependent on external funding and, at the same time, most vulnerable to sudden reversals of international capital flows. Yet, simple solutions of how to counterbalance the potential threats of capital mobility in a second-best equilibrium, are not found to be easily forthcoming. In particular, this paper argues that capital controls are no panacea – even less so, if they delay necessary macro- and microeconomic reforms.

Download or read book Revisiting the Determinants of Capital Flows to Emerging Markets A Survey of the Evolving Literature written by Swarnali Ahmed Hannan and published by International Monetary Fund. This book was released on 2018-09-28 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper documents the evolution of gross and net capital flows to emerging market economies and surveys the large literature on the potential drivers. While the capital flow landscape has been shaped by the evolution of both global and country-specific factors, the relative importance of these factors has varied over time and differs depending on the type of capital flows. The findings from the survey of the literature thus underscores the importance of policies in both source and recipient countries in shaping capital flows.

Download or read book Capital Flows and Crises written by Barry J. Eichengreen and published by MIT Press. This book was released on 2004 with total page 396 pages. Available in PDF, EPUB and Kindle. Book excerpt: An analysis of the connections between capital flows and financial crises as well as between capital flows and economic growth.

Download or read book International Capital Flow Pressures written by Ms.Linda S. Goldberg and published by International Monetary Fund. This book was released on 2018-02-16 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a new measure of capital flow pressures in the form of a recast Exchange Market Pressure index. The measure captures pressures that materialize in actual international capital flows as well as pressures that result in exchange rate adjustments. The formulation is theory-based, relying on balance of payments equilibrium conditions and international asset portfolio considerations. Based on the modified exchange market pressure index, the paper also proposes the Global Risk Response Index, which reflects the country-specific sensitivity of capital flow pressures to measures of global risk aversion. For a large sample of countries over time, we demonstrate time variation in the effects of global risk on exchange market pressures, the evolving importance of the global factor across types of countries, and the changing risk-on or risk-off status of currencies.

Download or read book Capital Flows Review of Experience with the Institutional View written by International Monetary Fund. Legal Dept. and published by International Monetary Fund. This book was released on 2016-07-11 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: Capital flows are an important aspect of the international monetary system. They provide significant benefits, both direct and indirect. At the same time, they also carry risks, and a key challenge for countries is how to harness the benefits while managing the risks. The institutional view on the liberalization and management of capital flows provides the Fund with a basis for consistent advice on policies related to capital flows. This paper reviews countries’ experiences with handling capital flows in the period since the adoption of the IMF’s institutional view in 2012. Based on the experience, it identifies a few areas in which the view would benefit from further clarification or elaboration.

Download or read book International capital flows and their impact on the Turkish economy written by Ahmet Çimenoğlu and published by . This book was released on 2002 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The 1990s witnessed a significant surge in international capital flows. However, unlike in the previous episodes of high capital mobility , not only developed countries but also developing countries were subject to international capital flows. Especially in the first half of 1990s, there has been a significant increase in capital flows to developing countries. However in 1997, the wave of crises that started in Mexico in 1994 spread to the South East Asian countries that were pinpointed as success stories, to Russia in 1998, to Brazil in 1999, to Turkey in 2000, and to Turkey and Argentina in 2001. All of these countries have been severely hit by this recent wave of crises. The increase in the frequency of crises in developing countries raised concerns about their relationship to capital flows. The purpose of this study is to investigate the effects of international capital flows on developing country economies, paying specific attention to Turkey .In doing so, first a brief history of the international capital flows has been presented, then discussions about the determinants of capital flows have been reviewed. In fact, international capital flows were quite mobile at the end of the 19th century.However, these flows almost disappeared after the World War 1. Capital flows started to increase among developed countries in the 1970s. However, the surge in capital flows in developing countries only became significant in the 1990s. The wave of liberalisation of capital accounts should be seen as complementary to liberalisation and deregulation of foreign trade and financial sectors. Following the developed countries that put in effect liberalisation process in the 1970s, developing countries started to implement similar policies, mostly at the suggestion of international financial institutions and developed country goverments. Although there are some minor differences from country to country , the general outline of the liberalisation episodes of. developing countries were quite similar. This outline was basically prepared by elements of the so-called Washington Consensus, mainly in the last two decades. These elements are the International Monetary Fund (IMF), World Bank, World Trade Organisation (WTO), American economic bureaucracy, and private think-tank institutions mostly based in Washington. The proposed process of liberalisation and integrati9n with the world financial markets was submitted to the developing countries that expressed their willingness to accept liberalisation and integration. The crises that many countries have been subject to in the 1990s were mainly classified as currency and banking sector crises. For this reason, understanding what exactly currency crises are, which mechanisms produce them, whether it is possible to foresee them, and what their effects are on macroeconomic variables need to be examined carefully. Moreover, the observation that the currency crises usually come along with banking crises raised concerns about the relationpship between the two, and a substantial literature on this issue emerged. Another important discussion is about the choice of the exchange rate regime and whether this choice is influential in instigating a crisis. The literature on these issues is presented in the third chapter of this study .These discussions are quite relevant for Turkey which is on the brink of implementing a new exchange rate and monetary policy . The last chapter of this study is devoted to the analysis of Turkey's experience with international capital flows. Until the 1990s, Turkey was almost completely isolated from international capital flows. Liberalisation of capital account transactions in 1989 can be regarded as the continuation of the liberalisation process that started in 1980 with the liberalisation of foreign trade, followed by gradual deregulation of financial markets. Through the effective implementation of capital account liberalisation in 1990, there has been an increase in international capital movements in Turkey .When capital flows in the 1990s are analysed, there are two features that distinguish Turkey from her peers. The first is that the net capital flows to Turkey , when measured as the share of capital flows in Gross National Product (GNP), were lower than those flowing to comparable developing countries. The second is that the volatility of the flows was higher in Turkey than in other developing countries, meaning that Turkey could not enjoy sustained net capital inflows in the 1990s. Another issue that has been investigated in this study is the degree of success Turkey had in integrating into the global financial markets. For this investigation, two methods that have been widely employed have been adopted to Turkey .These methods are testing whether the uncovered interest parity (UIP) holds for Turkey , and whether savings and investments are correlated in Turkey .In the first test, the rationale is to test whether the yields on similar assets in domestic and foreign markets do approach each other, as the theory predicts. The results of this test for Turkey indicate that the domestic and foreign interest rates on similar assets do not converge. The second test that has been conducted for Turkey is to check whether savings and investments are correlated. The rationale behind this test is that capital has the ability of searching for the highest yield and investing there, given that capital can flow freely across borders. Hence, savings generated in a specific country can be directed to somewhere else in the world, if investment there offers a higher yield than the country of origin. In other words, investment at home does not necessarily have to be financed by savings at home. The theory predicts that, if a country is successfully integrated into the international financial system, then there should be no correlation between her savings and investments. The tests that have been run for Turkey to check for this relationship yielded somewhat confusing results. Moreover, the lack of data to resolve the endogeneity problems inherent in this test forces one to be cautious in interpreting the results obtained. The results obtained from annual and quarterly data differ as well. While with the annual data it is not possible to argue that savings and investments are not correlated at any time in Turkey , with quarterly data, it is possible to argue that a correlation,between the two disappears after 1990. Roughly summarising .the results of the tests, it can be argued that investments and savings in Turkey exhibited a much stronger correlation before 1990, but this correlation weakened afterwards, just as the theory would predict. To sum up, Turkey made the necessary legal and regulatory changes in order to liberalise her capital account in 1990. This apparently increased the volume of international capital transactions in the 1990s. However, it is difficult to argue that Turkey successfully managed to completely integrate her financial system with global financial markets. The main reasons behind this are macroeconomic instability , underdeveloped financial markets, and working 'in a regulatory and supervisory environment that was too weak to help enhance the efficiency of the system. The final part of this study is devoted to the analysis of the effects of international capital flows on the Turkish economy .In order to analyse these effects, a simple framework has been used in which the channels through which capital inflows are transmitted to the domestic economy are determined. Afterwards, the existence of these channels has been tested using econometric techniques. The findings suggest that a surge in capital inflows firstly increases private sector consumption expenditures and then private sector investments. However, the increase in investment is directed more heavily to non-tradable sectors. This finding has far reaching implications on the process that leads to crises in Turkey .Increased investments in non-tradable sectors do not contribute to the foreign exchange earning capacity of the country .In times of crises, this turns into a major problem as the country faces significant capital outflows and eventually goes into a crisis accompanied by large current account deficits. Given the above process, in this study it is argued that the existence of international capital flows exacerbates the crisis thatTurkey faces. However, it does not mean that it is the ''capital inflows'' themselves that create the crisis. In fact, it is the handling of the foreign capital flows that triggers the crisis. The Turkish financial system was not, and in fact is still not, developed enough to damp down the excessive volatility in international capital flows. Moreover, most of the capital inflows that were relied upon in financing current account deficits were of short-term nature. In other words, Turkey relied mainly on short-term capital inflows in financing her current account deficits, with a domestic financial system that was not large and sophisticated enough to handle the potential difficulties associated with sudden capital inflow reversals. Even more importantly , successive governments over the last decade ignored the fact that these capital inflows might not be sustainable, and went on expanding the public sector deficits all through 1990s. Hence, given the above vulnerabilities, crises were inevitable.

Download or read book International Capital Flows written by Martin Feldstein and published by University of Chicago Press. This book was released on 2007-12-01 with total page 500 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent changes in technology, along with the opening up of many regions previously closed to investment, have led to explosive growth in the international movement of capital. Flows from foreign direct investment and debt and equity financing can bring countries substantial gains by augmenting local savings and by improving technology and incentives. Investing companies acquire market access, lower cost inputs, and opportunities for profitable introductions of production methods in the countries where they invest. But, as was underscored recently by the economic and financial crises in several Asian countries, capital flows can also bring risks. Although there is no simple explanation of the currency crisis in Asia, it is clear that fixed exchange rates and chronic deficits increased the likelihood of a breakdown. Similarly, during the 1970s, the United States and other industrial countries loaned OPEC surpluses to borrowers in Latin America. But when the U.S. Federal Reserve raised interest rates to control soaring inflation, the result was a widespread debt moratorium in Latin America as many countries throughout the region struggled to pay the high interest on their foreign loans. International Capital Flows contains recent work by eminent scholars and practitioners on the experience of capital flows to Latin America, Asia, and eastern Europe. These papers discuss the role of banks, equity markets, and foreign direct investment in international capital flows, and the risks that investors and others face with these transactions. By focusing on capital flows' productivity and determinants, and the policy issues they raise, this collection is a valuable resource for economists, policymakers, and financial market participants.

Download or read book Long Term International Capital Movements and Technology written by Mr.Harm Zebregs and published by International Monetary Fund. This book was released on 1999-09-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews the theoretical literature on the question of how long-term international capital movements depend on the international distribution of technology. It focuses on long-term investment flows, as these are more affected by international differences in technologies than short-term financial flows. International capital movements are investigated in the context of various technology specifications, ranging from models with only one common technology to those with multiple and endogenous technologies. The paper demonstrates that the theoretical specification of technology is crucial to the prediction of the size and direction of international capital movements.

Download or read book International Capital Flows and the Lucas Paradox written by Muhammad Akhtaruzzaman and published by Springer. This book was released on 2019-06-21 with total page 203 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book offers a comprehensive analysis of the debates on international capital flows, and presents a new evidence-based answer to the long-standing question of why capital doesn’t tend to flow from rich to poor countries as predicted by standard neoclassical theory – a puzzle known as the Lucas paradox. Further, the book reviews alternative approaches to conventional estimates of the marginal product of capital (MPK) and considers whether these estimates actually help us understand observed international capital flows. A rigorous quantitative approach is subsequently used to provide clear empirical evidence on the determinants of capital flows across borders. The findings of this empirical analysis suggest that generous economic policies on capital account convertibility are more influential than differences in institutional quality in terms of determining international capital flows. In closing, the relative importance of various types of political risk (e.g. expropriation and corruption) is examined. After determining that expropriation risk has one of the greatest effects on foreign direct investment (FDI), the book proposes an appealingly intuitive explanation for the lack of FDI flows to many capital-scarce developing countries.

Download or read book International Capital Flows and Development written by Mr.Thierry Tressel and published by International Monetary Fund. This book was released on 2010-10-01 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Does capital flow from rich to poor countries? We revisit the Lucas paradox and explore the role of capital account restrictions in shaping capital flows at various stages of economic development. We find that, when accounting for the degree of capital account openness, the prediction of the neoclassical theory is confirmed: less developed countries tend to experience net capital inflows and more developed countries tend to experience net capital outflows, conditional of various countries’ characteristics. The findings are driven by foreign direct investment, portfolio equity investment, and to some extent by loans to the private sector.

Download or read book The Volatility of Capital Flows in Emerging Markets written by Maria Sole Pagliari and published by International Monetary Fund. This book was released on 2017-03-07 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: Capital flow volatility is a concern for macroeconomic and financial stability. Nonetheless, literature is scarce in this topic. Our paper sheds light on this issue in two dimensions. First, using quarterly data for 65 countries over the period 1970Q1-2016Q1, we construct three measures of volatility, for total capital flows and key instruments. Second, we perform panel regressions to understand the determinants of volatility. The measures show that the volatility of all instruments is prone to bouts, rising sharply during global shocks like the taper tantrum episode. Capital flow volatility thus remains a challenge for policy makers. The regression results suggest that push factors can be more important than pull factors in explaining volatility, illustrating that the characteristics of volatility can be different from those of the flows levels.

Download or read book Determinants and Systemic Consequences of International Capital Flows written by Mr.Timothy D. Lane and published by International Monetary Fund. This book was released on 1991-04-15 with total page 116 pages. Available in PDF, EPUB and Kindle. Book excerpt: The growing integration of capital markets has strengthened incentives for greater international coordination of economic and financial policies. Structural changes in these financial market, however, may have undermined the effectiveness of monetary and fiscal policy and complicated market access by developing countries. These are among the findings of this study of capital flows in the 1970s and the 1980s.

Download or read book International Capital Flow Pressures written by Ms.Linda S. Goldberg and published by International Monetary Fund. This book was released on 2018-02-16 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a new measure of capital flow pressures in the form of a recast Exchange Market Pressure index. The measure captures pressures that materialize in actual international capital flows as well as pressures that result in exchange rate adjustments. The formulation is theory-based, relying on balance of payments equilibrium conditions and international asset portfolio considerations. Based on the modified exchange market pressure index, the paper also proposes the Global Risk Response Index, which reflects the country-specific sensitivity of capital flow pressures to measures of global risk aversion. For a large sample of countries over time, we demonstrate time variation in the effects of global risk on exchange market pressures, the evolving importance of the global factor across types of countries, and the changing risk-on or risk-off status of currencies.

Download or read book Capital Flow Deflection written by Paolo Giordani and published by International Monetary Fund. This book was released on 2014-08-08 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper focuses on the coordination problem among borrowing countries imposing controls on capital infl ows. In a simple model of capital flows and controls, we show that inflow restrictions distort international capital flows to other countries and that, in turn, such capital flow deflection may lead to a policy response. We then test the theory using data on inflow restrictions and gross capital inflows for a large sample of developing countries between 1995 and 2009. Our estimation yields strong evidence that capital controls deflect capital flows to other borrowing countries with similar economic characteristics. Notwithstanding these strong cross-border spillover effects, we do not find evidence of a policy response.

Download or read book The Drivers of Capital Flows in Emerging Markets Post Global Financial Crisis written by Swarnali Ahmed Hannan and published by International Monetary Fund. This book was released on 2017-03-13 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a sample of 34 emerging markets and developing economies over the period 2009Q3-2015Q4, the paper employs a panel framework to study the determinants of capital flows, both net and gross, across a wide range of instruments. The baseline regressions are then extended to focus on high and low episodes – quarters with flows one standard deviation above/below mean. Overall, the results suggest that the capital flow slowdown witnessed in recent years is due to a combination of lower growth prospects of recipient countries and worse global risk sentiment. However, the determinants of flows can be considerably different across instruments and across the type of flows considered, net or gross. The sensitivity of certain types of flows, towards push and pull factors, increases during periods of high and low capital flows. Moreover, some variables may not necessarily be significant during normal times, but can be important drivers during such episodes, and vice versa. Indicators like the gap between the U.S. long- and short-term maturity bond yields – not significant during normal times – can be an important driver during high episodes.