Capital flows to emerging markets: Liberalization, overshooting and volatility (a comment)

Carmen Reinhart

MPRA Paper from University Library of Munich, Germany

Abstract: Comment on: Philiippe Bachetta and Eric Van Wincoop, who in this paper aim is to assess the impact of financial liberalization in emerging markets on the dynamics of capital flows to these countries. By positing a cost of absorbing these flows, the authors explain how liberalization can give rise to an “overshooting” of capital inflows and asset prices. In addition, the authors examine whether incomplete information can give rise to a high degree of volatility in capital flows as well as to contagion. They also suggest that deviations in capital inflows from their steady-state levels can be used as a potential signal of future crises.

Keywords: Capital; flows; liberalization; investment; volatility; asset; price; bubbles (search for similar items in EconPapers)
JEL-codes: F21 F3 (search for similar items in EconPapers)
Date: 2000
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Published in Capital Flows and the Emerging Economies: Theories, Evidence, and Controversies, Sebastian Edwards, ed. (Chicago: University of Chicago Press for the NBER, 2000), (2000): pp. 98-104

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Related works:
Chapter: Comment on "Capital Flows to Emerging Markets: Liberalization, Overshooting, and Volatility" (2000)
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