One-Size-Fits-One: Tailor-Made Fiscal Responses to Capital Flows

Daria Zakharova

No 2008/269, IMF Working Papers from International Monetary Fund

Abstract: This paper surveys policy responses in recent years to capital inflows in a diverse group of countries that are represented by the Netherlands at the IMF Executive Board. Based on the findings from cross-country empirical literature, the paper distills some guiding principles for policy responses to excessive capital inflows, depending on country-specific circumstances and with a particular focus on fiscal policy. In addition to considering the conventional macroeconomic and structural policy tools, the paper also discusses the role of microfiscal policies in affecting the size and the composition of capital inflows. While conditions in these countries have changed very recently, the policy principles remain salient.

Keywords: WP; current account; current account deficit; exchange rate; deficit (search for similar items in EconPapers)
Pages: 27
Date: 2008-12-01
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Citations: View citations in EconPapers (3)

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