Economics at your fingertips  

Capital Inflows and the Real Exchange Rate: Analytical Framework and Econometric Evidence

Pierre-Richard Agénor and Alexander Hoffmaister ()

No 96/137, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: Korea, Republic of; Mexico; Philippines; Thailand; capital inflows, exchange rate, real exchange rate, capital flows, capital movements (search for similar items in EconPapers)
Date: 1996-12-01
References: Add references at CitEc
Citations View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
Journal Article: Capital inflows and the real exchange rate: analytical framework and econometric evidence (1996)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Series data maintained by Jim Beardow ().

Page updated 2015-11-08
Handle: RePEc:imf:imfwpa:96/137