Capital Flow Paradox, Speculation And External Adjustment In Emerging Market Economies

Massimiliano La Marca ()

No 1129, International Trade and Finance Association Conference Papers from International Trade and Finance Association

Abstract: The paper provides some evidence on the current pattern of current account imbalances, real exchange rate and growth in emerging market economies and offers an interpretation to the fact that fast-growing economies tend to run small current account deficits or surpluses while preserving a non overvalued real exchange rate. The evidence that some speculative capital flows induced by domestic monetary policies may bring the exchange rate on a path inconsistent with an improvement of the external position provides a basis for a reconsideration of monetary and exchange rate policies at the national and international level.This paper was presented May 22, 2008, at the 18th International Conference of the International Trade and Finance Association meeting at Universidade Nova de Lisboa, Lisbon, Portugal.Keywords: foreign exchange rate, capital flows, growth, carry trade.JEL Classification: F31, F32, G15

Date: 2008-08-15
New Economics Papers: this item is included in nep-cba and nep-ifn
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Persistent link: https://EconPapers.repec.org/RePEc:bep:itfapp:1129

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