Managing Capital Inflows in the 1990s and the “Encaje”

Ricardo Ffrench-Davis

Chapter VIII in Economic Reforms in Chile, 2010, pp 209-235 from Palgrave Macmillan

Abstract: Abstract In the nineties, private capital inflows returned to Latin America (see Calvo et al., 1993; Ffrench-Davis and Griffith-Jones, 1995). Undoubtedly, the resumption of capital flows, which had been interrupted in the eighties with dramatic recessive effects on economic activity, had positive short-run effects. In fact, it implied relaxing the shortage of foreign currency (binding external constraint, BEC) under which most countries had operated during the debt crisis. However, both the large magnitude of the new capital inflows and their composition (prone to volatility) caused a growing macroeconomic disequilibria in the recipient countries.

Keywords: Exchange Rate; Foreign Direct Investment; Central Bank; Current Account; Real Exchange Rate (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-28965-9_8

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DOI: 10.1057/9780230289659_8

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