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Dealing with large and volatile capital flows and the role of the IMF

Author

Listed:
  • Broos, Menno
  • Ghalanos, Michalis
  • Kennedy, Bernard
  • Landbeck, Alexander
  • Lerner, Christina
  • Menezes, Paula
  • Schiavone, Alessandro
  • Tilley, Thomas
  • Viani, Francesca
  • Reinhardt, Dennis
  • Metzemakers, Paul
  • L´Hotellerie-Fallois, Pilar
  • Moreno, Pablo
  • Balteanu, Irina
  • Beirne, John
  • Brüggemann, Axel
  • Bussière, Matthieu
  • Estrada, Ángel
  • Frost, Jon
  • Herzberg, Valerie
  • Vonessen, Benjamin

Abstract

The last decade has been characterised by the pronounced volatility of capital flows. While cross-border capital flows can have many benefits for both advanced and emerging market economies, they may also carry risks, which require appropriate policy responses. Disentangling the push from the pull factors driving capital flows is key to designing appropriate policies to deal with them. Strong institutions, sound fundamentals and a large domestic investor base tend to shield economies from adverse global conditions and attract less volatile types of capital. However, when the policy space for using traditional macroeconomic policies is limited, countries may also turn to macroprudential and capital flow management policies in a pragmatic manner. The IMF can play an important role in helping countries to deal with capital flows, through its surveillance and lending policy and through international cooperation. JEL Classification: F3, F32, F38, F42, F65, G28

Suggested Citation

  • Broos, Menno & Ghalanos, Michalis & Kennedy, Bernard & Landbeck, Alexander & Lerner, Christina & Menezes, Paula & Schiavone, Alessandro & Tilley, Thomas & Viani, Francesca & Reinhardt, Dennis & Metzem, 2016. "Dealing with large and volatile capital flows and the role of the IMF," Occasional Paper Series 180, European Central Bank.
  • Handle: RePEc:ecb:ecbops:2016180
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    Cited by:

    1. Hoggarth, Glen & Jung, Carsten & Reinhardt, Dennis, 2016. "Capital inflows — the good, the bad and the bubbly," Bank of England Financial Stability Papers 40, Bank of England.
    2. repec:pts:journl:y:2017:i:3:p:90-103 is not listed on IDEAS

    More about this item

    Keywords

    capital flow management; capital flows; IMF; international cooperation;

    JEL classification:

    • F3 - International Economics - - International Finance
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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