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Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors

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Listed:
  • Guillermo A. Calvo

    (International Monetary Fund)

  • Leonardo Leiderman

    (International Monetary Fund)

  • Carmen M. Reinhart

    (International Monetary Fund)

Abstract

The characteristics of recent capital inflows into Latin America are discussed. It is argued that these inflows are partly explained by conditions outside the region, like the recession in the United States and lower international interest rates. The importance of external factors suggests that a reversal of those conditions may lead to a future capital outflow, increasing the macroeconomic vulnerability of Latin American economies. Policy options, it is argued, are limited.

Suggested Citation

  • Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1993. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 108-151, March.
    • Handle: RePEc:pal:imfstp:v:40:y:1993:i:1:p:108-151
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    1. Donald J Mathieson & Liliana Rojas-Suárez, 1992. "Liberalization of the Capital Account; Experiences and Issues," IMF Working Papers 92/46, International Monetary Fund.
    2. Guillermo A. Calvo, 1983. "Trying to Stabilize: Some Theoretical Reflections Based on the Case of Argentina," NBER Chapters, in: Financial Policies and the World Capital Market: The Problem of Latin American Countries, pages 199-220, National Bureau of Economic Research, Inc.
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    4. Alexander K. Swoboda & Jacob A. Frenkel & Jacques R. Artus, 1983. "Exchange Rate Regimes and European-U.S. Policy Interdependence [with Comments] (Régimes de taux de change et interdépendance des politiques économiques en Europe et aux Etats-Unis) (Régimen cambia," IMF Staff Papers, Palgrave Macmillan, vol. 30(1), pages 75-112, March.
    5. Stiglitz, Joseph E, 1990. "Symposium on Bubbles," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 13-18, Spring.
    6. Mohamed A. El-Erian, 1992. "Restoration of Access to Voluntary Capital Market Financing: The Recent Latin American Experience," IMF Staff Papers, Palgrave Macmillan, vol. 39(1), pages 175-194, March.
    7. James H. Stock & Mark W. Watson, 1989. "New Indexes of Coincident and Leading Economic Indicators," NBER Chapters, in: NBER Macroeconomics Annual 1989, Volume 4, pages 351-409, National Bureau of Economic Research, Inc.
    8. Bernanke, Ben S., 1986. "Alternative explanations of the money-income correlation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 25(1), pages 49-99, January.
    9. Calvo, Guillermo & Vegh, Carlos, 1991. "Exchange rate stabilization under imperfect credibility," MPRA Paper 20486, University Library of Munich, Germany.
    10. D. F. I. Folkerts-Landau & Donald J Mathieson & Morris Goldstein & Liliana Rojas-Suárez & José Saúl Lizondo & Timothy D. Lane, 1991. "Determinants and Systemic Consequences of International Capital Flows," IMF Occasional Papers 77, International Monetary Fund.
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    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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