The last decade has been characterised by the pronounced volatility of capital flows. While cross-border capital flows can have many benefits for both advanced and emerging market economies, they may also carry risks, which require appropriate policy responses. Disentangling the push from the pull factors driving capital flows is key to designing appropriate policies to deal with them. Strong institutions, sound fundamentals and a large domestic investor base tend to shield economies from adverse global conditions and attract less volatile types of capital. However, when the policy space for using traditional macroeconomic policies is limited, countries may also turn to macro-prudential and capital flow management policies in a pragmatic manner. The IMF can play an important role in helping countries to deal with capital flows, through its surveillance and lending policy and through international cooperation.
Keywords: capital flows, capital flow management, international cooperation, IMF
L´Hotellerie-Fallois, Pilar and Moreno, Pablo and Balteanu, Irina and Beirne, John and Broos, Menno and Brüggemann, Axel and Bussiere, Matthieu and Estrada, Ángel and Frost, Jon and Ghalanos, Michalis and Herzberg, Valerie and Kennedy, Bernard and Landbeck, Alexander and Lerner, Christina and Metzemakers, Paul and Reinhardt, Dennis and Sánchez, Paula and Schiavone, Alessandro and Tilley, Thomas and Viani, Francesca and Vonessen, Benjamin, Dealing with Large and Volatile Capital Flows and the Role of the IMF (September 30, 2016). ECB Occasional Paper No. 180, Available at SSRN: https://ssrn.com/abstract=2910959 or http://dx.doi.org/10.2139/ssrn.2910959
International Political Economy: Monetary Relations eJournal
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