Capital Flows, Asset Prices and Output in Emerging Market Economies

Ranjanendra Narayan Nag, Sayan Baksi and Sayantan Majumder ()

Foreign Trade Review, 2015, vol. 50, issue 1, 1-20

Abstract: In this article we construct a simple open-economy macro model to examine how capital flows, monetary policy and dividend policies of firms influence asset prices, economic activity and inflation. In this model, we consider a three-asset framework based on domestic money, domestic equity and foreign bonds under flexible exchange rate. The model is based on the assumptions of imperfect asset substitutability and absence of sterilization. The model also incorporates an aggregate supply function in the presence of wage indexation. The model can apply to a large class of emerging market economies which have embarked on a programme of liberalization of the financial sector in general and stock market in particular.

Keywords: Capital flow; exchange rates; stock market; Tobin’s q; monetary policy (search for similar items in EconPapers)
JEL-codes: E5 F31 F32 G12 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0015732514558138 (text/html)

Related works:
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:sae:fortra:v:50:y:2015:i:1:p:1-20

DOI: 10.1177/0015732514558138

Access Statistics for this article

More articles in Foreign Trade Review
Bibliographic data for series maintained by SAGE Publications ().