Managing Risks in a Volatile Environment: The Capital Inflows Problem in Asia

Tony Cavoli () and Ramkishen Rajan
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Tony Cavoli: School of Commerce, University of South Australia, Postal: 100, North Terrace , Adelaide Australia, http://www.unisa.edu.au

Economia Internazionale / International Economics, 2009, vol. 62, issue 3, 325-340

Abstract: Since the financial crisis of 1997-98 and the subsequent sharp capital outflows from economies in Emerging Asia, the region has been running persistent balance of payments surpluses. The region has consequently become a net exporter of capital to the rest of the world while still depending very heavily on gross financing from the rest of the world. This paper has two parts. It briefly considers the dynamics of international capital flows to Emerging Asia, focusing on the types of flows into and out of the region. One way of overcoming the liquidity effects of persistent capital inflow is for policymakers to employ sterilized intervention. The paper therefore goes on to estimate the extent of monetary sterilization in Emerging Asia over the sample period 1990m1 to 2007m12.

Keywords: Balance of Payments Surplus; Capital Flows; Emerging Asia; International Reserves; Sterilization (search for similar items in EconPapers)
JEL-codes: E51 E52 E58 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (1)

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