Since the early 1990s, there is an upsurge in foreign capital flows to developing economies, particularly into emerging markets. One view argues that capital inflows do help to increase efficiency, a better allocation of capital and to fill up the investment-saving gap. Adherents to that view...

Since the early 1990s, there is an upsurge in foreign capital flows to developing economies, particularly into emerging markets. One view argues that capital inflows do help to increase efficiency, a better allocation of capital and to fill up the investment-saving gap. Adherents to that view...

This paper empirically examines the effect of foreign capital inflows on domestic price levels, monetary expansion, and the exchange rate volatility for Pakistan using linear and nonlinear causality tests. The key message emerging from the analysis is that there is a significant inflationary...

Increasing FDI inflows into a booming sector resulting in an appreciation of the real exchange rate may entail further capital inflows and greater appreciation pressure on the real exchange rate up to an abrupt reversal of the capital (Botta, 2015). The macroeconomic instability of such...

This paper analyzes the management of surges in capital inflows to Emerging Markets. It reviews the main policy tools, including fiscal and monetary policy, exchange rate policy, foreign exchange market intervention, domestic prudential regulation, and capital controls. A key conclusion is that,...

We examine whether macroprudential policies and capital controls can enhance financial stability in the face of the risks typically associated with large capital inflows. We construct new indices of foreign currency (FX)-related prudential measures, domestic prudential measures, and...

Large and persistent capital inflows can be a double-edged sword. Accompanying its many attractions is the tendency to display a boom and bust pattern (volatility and reversals) in addition to the possibility of causing rapid exchange rate appreciation, inflation and loss of monetary policy...

Increasing FDI inflows into a booming sector resulting in an appreciation of the real exchange rate may entail further capital inflows and greater appreciation pressure on the real exchange rate up to an abrupt reversal of the capital (Botta, 2015). The macroeconomic instability of such...

Many of the emerging market economies in Europe are presently running current account deficits which are quite high relative to any global or historical standard and are fundamentally unsustainable. This includes the three poorer European Union (EU) members of the old Europe (Greece, Portugal,...