Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors

Leonardo Leiderman, Carmen Reinhart and Guillermo Calvo

No 1992/062, IMF Working Papers from International Monetary Fund

Abstract: The characteristics of recent capital inflows into Latin America are discussed. It is argued that these inflows are partly explained by conditions outside the region, like recession in the United States and lower international interest rates. This suggests the possibility that a reversal of those conditions may lead to a future capital outflow, increasing the macroeconomic vulnerability of Latin American economies. Policy options are argued to be limited.

Keywords: WP; central bank; balance of payments; terms of trade; nominal exchange rate; external shock; interest rate differential; capital gain; appreciation in Latin America; secondary market; reserves index; forecast error variance; episode of reserves accumulation; Capital inflows; Real exchange rates; International reserves; Capital outflows; Capital account; Western Hemisphere (search for similar items in EconPapers)
Pages: 66
Date: 1992-08-01
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Citations: View citations in EconPapers (132)

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Related works:
Journal Article: Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors (1993)
Working Paper: “Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors (1993)
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