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The case for capital account management in emerging market economies: The experiences of the BRICs

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  • Joerg Bibow

    () (Skidmore College, Saratoga Springs, New York, USA)

Abstract

Currency market intervention cum reserve accumulation has emerged as the favored »self-insurance« strategy in recipient countries of excessive private capital inflows. This paper argues that capital account management represents a less costly alternative line of defense deserving renewed consideration; especially in the absence of fundamental reform of the global monetary and financial order. Mainstream arguments in favor of financial globalization are found unconvincing. It is argued that any indirect benefits allegedly obtainable through hot money inflows are equally obtainable without actually tolerating such inflows. The paper investigates the experiences of Brazil, Russia, India and China (the BRICs) in the global crisis and subsequent recovery, focusing on their respective policies regarding capital flows.

Suggested Citation

  • Joerg Bibow, 2012. "The case for capital account management in emerging market economies: The experiences of the BRICs," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 9(1), pages 57-90.
  • Handle: RePEc:elg:ejeepi:v:9:y:2012:i:1:p57-90
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    Keywords

    capital flows; self-insurance; capital controls; financial regulation;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F39 - International Economics - - International Finance - - - Other
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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