Policy Responses to External Imbalances in Emerging Market Economies: Further Empirical Results

Chorng-Huey Wong and Luis Carranza (luiscarranzau@gmail.com)
Additional contact information
Chorng-Huey Wong: International Monetary Fund

IMF Staff Papers, 1999, vol. 46, issue 2, 5

Abstract: A bivariate vector-autoregression (VAR) model is used to test causal relations between the current account and the capital account in four emerging market economies. The results show that high capital mobility could be a major cause of current account instability. Therefore, macroeconomic policy to restore external balance must deal directly with capital inflows. The paper recommends making nominal exchange rate sufficiently flexible to avoid inconsistencies between short-run and long-run real exchange rates; complementing credit tightening by fiscal restraint to reduce interest rate differentials; and strengthening reforms and surveillance of the financial system to prevent banks from excessive risk taking. Copyright 1999, International Monetary Fund

JEL-codes: C32 E61 F21 F32 F41 (search for similar items in EconPapers)
Date: 1999
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://www.imf.org/external/pubs/ft/staffp/1999/06-99/pdf/wong.pdf main text (application/pdf)
http://www.imf.org/external/pubs/ft/staffp/1999/06-99/v46n2a5.csv supplementary data (text/plain)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Policy Responses to External Imbalances in Emerging Market Economies: Further Empirical Results (1998)
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: https://EconPapers.repec.org/RePEc:pal:imfstp:v:46:y:1999:i:2:p:5

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2

Access Statistics for this article

More articles in IMF Staff Papers from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla (sonal.shukla@springer.com) and Springer Nature Abstracting and Indexing (indexing@springernature.com).