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Threats To Macroeconomic Stability Under The Impact Of International Capital Movement

Author

Listed:
  • Victoria IORDACHI

    (INCE)

  • Stela CIOBU

    (Academy of Economic Studies of Moldova)

  • Dorina CLICHICI

Abstract

One of the most interesting issues that provoke controversial disputes is the impact of financial flows on the evolution of the states as a whole and economic growth of developing economies. The process of capital movement between countries cannot be stopped and it must be managed efficiently in order to obtain economic benefits and minimize the risks related to macroeconomic stability. The purpose of this study is to identify and analyze the effects of capital inflows on the macroeconomic stability of the Republic of Moldova. The research was based on the following methods: analysis and synthesis, induction and deduction, graphical and tabular methods, methods inherent in economic disciplines – observation, reasoning, comparison, classification, grouping; systemic methods and static analysis. As a result of the research, it is concluded that imprudently regulated capital inflows, in spite of their obvious advantages, could pose a serious threat to macroeconomic stability and external competitiveness, generating overheating of the economy, if their volume exceeds its ability to absorb them. However, the analysis depicts that remittances inflows have positively influenced so far, the economic development of the Republic of Moldova

Suggested Citation

  • Victoria IORDACHI & Stela CIOBU & Dorina CLICHICI, 2018. "Threats To Macroeconomic Stability Under The Impact Of International Capital Movement," Economy and Sociology, The Journal Economy and Sociology, issue 1, pages 62-68.
    • Handle: RePEc:aat:journl:y:2018:i:1:p:62-68
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    References listed on IDEAS

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    1. Christopher F. Baum & Madhavi Pundit & Arief Ramayandi, 2017. "Capital Flows and Financial Stability in Emerging Economies," ADB Economics Working Paper Series 522, Asian Development Bank.
    2. Shang‐Jin Wei, 2001. "Domestic Crony Capitalism and International Fickle Capital: Is There a Connection?," International Finance, Wiley Blackwell, vol. 4(1), pages 15-45.
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    Keywords

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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