Sterilization of Short-Term Capital Inflows - Through Lower Interest Rates ?

Michael Kumhof

Working Papers from Stanford University, Department of Economics

Abstract: October 2000

Reductions in international interest rates are a major cause of capital flows to emerging economies. Increases in domestic interest rates are a frequent policy response to the resulting price increases. This is often unsuccessful. The paper suggests a theoretical explanation based on distinctive features of emerging financial markets, including imperfect asset substitutability and imperfect capital mobility for some sectors of the economy. It concludes that the appropriate policy response to capital inflows may be lower interest rates. Keywords: intellectual property rights, copyright, sui generis protection of expressive material, economics of information-goods, open science, "fair use," scientific databases.

JEL Classification: H4, K39, O31, O34 -->

Keywords: intellectual property rights; copyright; sui generis protection of expressive material; economics of information-goods; open science (search for similar items in EconPapers)
JEL-codes: H4 K39 O31 O34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ifn
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Related works:
Journal Article: Sterilization of short-term capital inflows--through lower interest rates? (2004)
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