The case for capital account management in emerging market economies: The experiences of the BRICs

Jörg Bibow

European Journal of Economics and Economic Policies: Intervention, 2012, vol. 9, issue 1, 57-90

Abstract: Currency market intervention cum reserve accumulation has emerged as the favored »self-insurance« strategy in recipient countries of excessive private capital inflows. This paper argues that capital account management represents a less costly alternative line of defense deserving renewed consideration; especially in the absence of fundamental reform of the global monetary and financial order. Mainstream arguments in favor of financial globalization are found unconvincing. It is argued that any indirect benefits allegedly obtainable through hot money inflows are equally obtainable without actually tolerating such inflows. The paper investigates the experiences of Brazil, Russia, India and China (the BRICs) in the global crisis and subsequent recovery, focusing on their respective policies regarding capital flows.

Keywords: capital flows; self-insurance; capital controls; financial regulation (search for similar items in EconPapers)
JEL-codes: F02 F32 F33 F39 G28 O23 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:elg:ejeepi:v:9:y:2012:i:1:p57-90

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