Munich Personal RePEc Archive

The capital inflows problem: Concepts and issues

Reinhart, Carmen and Calvo, Guillermo and Leiderman, Leonardo (1994): The capital inflows problem: Concepts and issues. Published in: Contemporary Economic Policy , Vol. 12, No. 3 (July 1994): pp. 54-66.


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Since 1990 capital has flowed from industrial countries to developing regions like Latin America, and parts of Asia. Reentry into international capital markets is a welcome turn of events for most countries. However, capital inflows are often associated with inflationary pressures, a real exchange rate appreciation, a deterioration in the current account, and a boom in bank lending. This paper briefly examines how these inflows have altered the macroeconomic environment in a number of Asian and Latin American countries. The pros and cons of the policy options are discussed.

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