Capital Inflows and Balance of Payments Pressures: Tailoring Policy Responses in Emerging Market Economies

Bikas Joshi, Manuela Goretti, Uma Ramakrishnan, Alun Thomas, Atish Ghosh () and Juan Zalduendo

No 2008/002, IMF Policy Discussion Papers from International Monetary Fund

Abstract: Although capital inflows are generally beneficial to recipient countries, they also pose a challenge for the conduct of economic policy. This paper proposes a conceptual taxonomy to guide the design of policy responses in the face of capital flows. We explore how responses to capital surges should be differentiated based on the source of balance of payments pressures. We also examine whether the policy choices in emerging market countries conform to the taxonomy's predictions and find some correspondence, especially during periods of high global liquidity.

Keywords: PDP; BOP pressure; balance of payments; exchange rate; fiscal policy; appreciation; current account; surplus; capital flows; policy responses; exchange rate appreciation; appreciation pressure; financing Needs; fiscal policy measure; Capital inflows; Current account surpluses; Current account deficits; Current account balance; Global; Middle East; East Asia (search for similar items in EconPapers)
Pages: 21
Date: 2008-06-01
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=22007 (application/pdf)

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:imf:imfpdp:2008/002

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Policy Discussion Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().