Capital Flows in Central and Eastern Europe: Evidence and Policy Options

Carlos Végh Gramont, Ratna Sahay and Guillermo Calvo

No 1995/057, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the nature and composition of capital flows in selected countries in Central and Eastern Europe during 1987–93. The data show that there was a remarkable turnaround in the capital account in 1992–93. This improvement was accompanied by widening current account deficits, an increase in real consumption, and real exchange rate appreciation. In light of these developments, the paper discusses the main macroeconomic concerns raised by capital inflows and lays out the principal policy options relevant for the transition economies.

Keywords: WP; central bank; monetary aggregate; interest rate; price level; transition economy; economic system; nominal exchange rate; excess reserves; Capital inflows; Real exchange rates; Capital flows; Capital account; Central and Eastern Europe; Eastern Europe; Asia and Pacific (search for similar items in EconPapers)
Pages: 48
Date: 1995-06-01
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Citations: View citations in EconPapers (24)

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