Capital Flows in the APEC Region

Reinhart, Carmen and Khan, Mohsin (1995): Capital Flows in the APEC Region. Published in: IMF Occasional Paper 122, (Washington DC: International Monetary Fund, April 1995). (March 1995): pp. 1-17.

Abstract

This paper describes the current episode of capital inflows to several Asian economies, summarizing the principal facts, the impact of the inflows, and policy options.25 The discussion also covers, when relevant, the similar experiences of Latin American countries, with an emphasis on the policy priorities that could ensure the persistence and sustainability of these flows, as far as possible. The analysis draws heavily on previous work by Calvo, Leiderman, and Reinhart (1993, 1994, and forthcoming, 1995), who used data for ten Latin American countries and eight Asian countries, as well as other recent studies undertaken in the IMF. The first part of this section describes the main characteristics and macroeconomic consequences of capital inflows to the Asian region. The second part discusses the role of external factors in the present inflows episode, as well as the likely factors that will determine the sustainability of these capital inflows. Finally, the relative merits of various policy responses to the surge in capital inflows are discussed.

• Item Type: MPRA Paper
• Language: English
• Subjects: F - International Economics > F3 - International Finance > F32 - Current Account Adjustment ; Short-Term Capital Movements; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; F - International Economics > F3 - International Finance > F31 - Foreign Exchange

References

Bercuson, Kenneth B., and Linda M. Koenig, The Recent Surge in Capital Inflows to Three ASEAN Countries: Causes and Macroeconomic Impact, Occasional Paper No. 15 (Kuala Lumpur, Malaysia: South East Asian Central Banks, 1993). Calvo, Guillermo, Leonardo Leiderman, and Carmen Reinhan, "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," Staff Papers, International Monetary Fund, Vol. 40 (March 1993), pp. 108-51. ___ , "The Capital Inflows Problem: Concepts and Issues," Contemporary Economic Policy, Vol. 12 (1994), pp.54--66. ___ , "Capital Inflows to Latin America: With a Reference to the Asian Experience," in Capital Controls. Exchange Rates and Monetary Policy in the World Economy, edited by S. Edwards (fonhcoming, Cambridge: Cambridge University Press, 1995). Chuhan, Punam, Stijn Claessens, and Nlandu Mamingi, "Equity and Bond Flows to Latin America and Asia: The Role of Global and Country Factors" (unpublished; Washington: World Bank, June 19935. EI-Erian, Mohamed A., "Restoration of Access to Voluntary Capital Market Financing," Staff Papers, International Monetary Fund, Vol. 39 (March 1992), pp. 175-94 . Fernandez-Arias, Eduardo, "The New Wave of Private Capital Inflows: Push or Pull?" (unpublished; Washington: World Bank, November 1993). Goldstein, Morris, and Michael Mussa, "The Integration of World Capital Markets," IMF Working Paper 93/95 (Washington: International Fund, December 1993). Gooptu, Sudarshan, "Portfolio Investment flows to Emerging Markets," in Portfolio Investment in Developing Countries, edited by S. Claessens and S. Gooptu (Washington: World Bank, 1993). Grobar, Lis3. M.. "The Effect of Real Exchange Rate Uncertainty on LDC Manufactured Exports," Journal of Development Economics, Vol. 41 (August 1993), pp.367-76. Helpman, Elhanan, Leonardo Leiderman, and Gil Bufman, "A New Breed of Exchange Rate Bands: Chile, Israel, and Mexico," Economic Policy: A European Forum, Vol. 9 (October 1994), pp. 260-306. International Monetary Fund, Determinants and Systemic Consequences of International Capital Flows, IMF Occasional Paper No. 77 (Washington: International Monetary Fund, March 1991). ___ , Private Market Financingfor Developing Countries, World Economic and Financial Survey Series (Washington: International Monetary Fund, 1992 and 1993). ___ , International Financial Statistics (Washington: International Monetary Fund, various issues). ___ ,World Economic Outlook (Washington: International Monetary Fund, various issues). Kiguel, Miguel, and Leonardo Leiderman, "On the Consequences of Sterilized Intervention in Latin America: The Cases of Colombia and Chile" (unpublished; Washington: World Bank, 1993). Mathieson, Donald 1., and Liliana Rojas-Suarez, Liberalization of the Capital Account: Experiences and Issues, IMF Occasional Paper No. 103 (Washington: International Monetary Fund, 1993). Park, Yc., and W. Park, "Capital Movement, Real Asset Speculation, and Macroeconomic Adjustment in Korea," in Capital Controls, Exchange Rates and Monetary Policy in the World Economy, edited by S. Edwards (forthcoming, Cambridge: Cambridge University Press, 1995). Reisen, Helmut, "Southeast Asia and the 'Impossible Trinity,''' International Economic Insights, Vol. 4 (May-June 1993), pp. 21-23. Schadler, Susan, Maria Carkovic, Adam Bennett, and Robert Kahn, Recent Experiences with Surges in Capital Inflows. IMF Occasional Paper No. 108 (Washington: International Monetary Fund, 1993) .