“Capital mobility in East Asian Countries is not so high”: Examining the impact of sterilization on capital flows

Yung-Hsiang Ying, Chung-Ming Kuan (), Chris Y. Tung and Koyin Chang

China Economic Review, 2013, vol. 24, issue C, 55-64

Abstract: This paper examines how international capital mobility can be affected by sterilization activities for seven East Asian economies. We develop a model that shows how sterilization measures by a central bank can lead to a reduction in a country's capital mobility. Using data from 1980 to 2006, we then derive sterilization intensities and capital mobility estimates for our countries, and discover that conventional measures overstate the degree of capital mobility due to their failure to adjust for sterilization actions. Our findings are important for policy makers since using our modified estimates will help to better understand the magnitude of capital mobility when central banks exercise sterilization to dampen the effect of capital inflows.

Keywords: Capital mobility; Sterilization; Capital movement (search for similar items in EconPapers)
JEL-codes: F30 F32 F33 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:24:y:2013:i:c:p:55-64

DOI: 10.1016/j.chieco.2012.11.001

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