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

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  • 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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    References listed on IDEAS

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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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