Managing Capital Flows: Issues in Selected Emerging Market Economies | Asian Development Bank

Managing Capital Flows: Issues in Selected Emerging Market Economies

Publication | October 2014
Managing Capital Flows: Issues in Selected Emerging Market Economies

This book compares and contrasts the theoretical paradigm and empirical evidence on merits of capital account liberalization and the role of capital account management.

Volatility in capital flows has increased significantly in recent years, particularly since the global financial crisis of 2008, making capital flow management one of the biggest challenges facing emerging market economies. How successful were these countries in managing their capital flows in the face of volatile global capital flows during 2003-2012? And how effective were policy makers in stemming the fallout on the economies of these countries?

The essays by eminent contributors compare and contrast the theoretical paradigm and empirical evidence on merits of capital account liberalization and the role of capital account management. With special focus on emerging market economies, the debates focus on ways to attract larger flows of capital to finance investment while safeguarding macro-management and averting sudden stops, flight to quality, and the resultant destabilizing forces to the economy. Bringing together the perspectives of academics and researchers on the one hand, and central bankers on the other, this volume offers a deeper understanding of capital account management which has remained one of the most debated topics among policy makers in the past decade.

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Contents 

  • Overview, Bruno Carrasco, Subir Gokarn, and Hiranya Mukhopadhyay
  • Compositional Shift and Volatility of Capital Flows
    • Capital Flow Volatility and Contagion: A Focus on Asia, Kristin J. Forbes
    • All Currencies Are Reserve Currencies, Joseph E. Gagnon
  • Challenges of Capital Account Management
    • Capital Controls and Real Exchange Rates, Michael W. Klein
    • Capital Controls: When Are Multilateral Considerations of the Essence?, Jonathan D. Ostry
  • Select Country Experiences
    • Costs and Benefits of Capital Account Management in India: A Practitioner's Perspective, Subir Gokarn and Bhupal Singh
    • Negotiating the Trilemma and Reserve Management in an Era of Volatile Capital Flows in India, Abhijit Sen Gupta and Rajeswari Sengupta
    • Sailing through the Global Financial Storm: Brazil's Recent Experience with Monetary and Macroprudential Policies to Lean Against the Financial Cycle and Deal with Systemic Risks, Luiz Awazu Pereira da Silva and Ricardo Eyer Harris
    • Managing Capital Flows: Indonesia's Experience, Hartadi A. Sarwono
  • Index