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Capital Flows, Financial Integration, and International Reserve Holdings

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Author Info

  • Sunil Sharma
  • Woon Gyu Choi
  • Maria Strömqvist

Abstract

This paper examines the interaction between capital flows and international reserve holdings in the context of increasing financial integration. For emerging markets the sensitivity of reserves to net capital flows was negative in the 1980s, but became positive after the Asian crisis when these countries used net capital flows to build up reserves. For advanced countries, net capital flows had a negative effect on reserves, especially in recent years. Using measures of financial globalization, we also provide evidence that the sensitivity of reserves to net capital flows increased with globalization for emerging markets while it decreased for advanced countries.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/151.

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Length: 36
Date of creation: 01 Jul 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/151

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Keywords: Capital flows; net net capital; financial integration; capital markets; globalization; international capital markets; capital flow; access to international capital markets; access to international capital; international capital; net capital flow; foreign assets; financial globalization; financial markets; international financial; volatility of capital inflows; current account deficits; current account balance; volatile access to international financial markets; international financial markets; exchange rates; capital account crises; foreign exchange; capital accounts; buffer stocks; global financial flows; volatile capital; global capital account liberalization; capital mobility; adverse external shocks; credit market imperfections; capital account transactions; hoarding; international financial statistics; global financial stability; gross domestic product; risk aversion; international financial transactions; international financial shocks; speculative attacks; liquid asset; global markets; international finance; debt service; government securities; global liquidity; capital flow reversals; current account deficit; credit market; global financial integration;

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References

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Citations

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Cited by:
  1. Yılmaz AKYÜZ, 2004. "Managing financial instability and shocks," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 19(219), pages 5-17.
  2. Winkler, Adalbert, 2010. "The Financial Crisis: A Wake-Up Call for Strengthening Regional Monitoring of Financial Markets and Regional Coordination of Financial Sector Policies?," ADBI Working Papers 199, Asian Development Bank Institute.
  3. Sabine Herrmann & Adalbert Winkler, 2009. "Financial markets and the current account: emerging Europe versus emerging Asia," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 145(3), pages 531-550, October.
  4. Yilmaz Akyüz, 2009. "Mananging Financial Instability: Why Prudence is not Enough?," Working Papers 86, United Nations, Department of Economics and Social Affairs.
  5. Katherine A. Smith & Enrique G. Mendoza, 2011. "Financial Globalization, Financial Crisis, and the External Capital Structure of Emerging Markets," 2011 Meeting Papers 235, Society for Economic Dynamics.
  6. Yilmaz Akyuz, 2008. "Managing Financial Instability in Emerging Markets: A Keynesian Perspective," Working Papers 2008/4, Turkish Economic Association.
  7. Sabine Herrmann & Adalbert Winkler, 2008. "Real convergence, financial markets, and the current account – Emerging Europe versus emerging Asia," Occasional Paper Series 88, European Central Bank.
  8. Enrique G. Mendoza & Katherine A. Smith, 2013. "Financial Globalization, Financial Crises, and the External Portfolio Structure of Emerging Markets," NBER Working Papers 19072, National Bureau of Economic Research, Inc.

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