Currency Wars, Coordination, and Capital Controls

Olivier Blanchard

No WP16-9, Working Paper Series from Peterson Institute for International Economics

Abstract: The strong monetary policy actions undertaken by advanced economies' central banks have led to complaints of "currency wars" by some emerging-market economies and to widespread demands for more macroeconomic policy coordination. This paper reviews cross-border effects of advanced economies' monetary policies on emerging economies, through goods markets, foreign exchange markets, and financial markets, and examines the scope for coordination. Blanchard concludes that, while advanced economies' monetary policies indeed have had substantial spillover effects on emerging-market economies, there was and still is little room for coordination. He argues that, given the limits on fiscal policy, restrictions on capital flows (i.e., capital controls) were and still are the appropriate macroeconomic instrument to advance the objectives of both macro and financial stability.

Keywords: Exchange Rates; Capital Controls; Capital Flows; Monetary Policy; Macroeconomic Policy Coordination (search for similar items in EconPapers)
JEL-codes: F3 F36 F42 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-ifn, nep-mac and nep-opm
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Citations: View citations in EconPapers (29)

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Related works:
Journal Article: Currency Wars, Coordination, and Capital Controls (2017)
Working Paper: Currency Wars, Coordination, and Capital Controls (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:iie:wpaper:wp16-9

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