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Capital Inflows and Policy Responses in the AsEAN Region

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  • Linda M. Koenig

Abstract

This paper reviews the experience of four ASEAN countries in dealing with an unprecedently strong influx of foreign capital in the late 1980s and early 1990s. While there was some increase in inflation associated with the inflows, it was relatively minor, and real exchange rates did not appreciate. Countries responded in the first instance by using open market operations for sterilized intervention. Subsequently, the fiscal stance was tightened. There was reluctance to allow nominal currency appreciation and, with one exception, controls on capital inflows were avoided.

Suggested Citation

  • Linda M. Koenig, 1996. "Capital Inflows and Policy Responses in the AsEAN Region," IMF Working Papers 96/25, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:96/25
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    References listed on IDEAS

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    1. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1994. "The Capital Inflows Problem: Concepts And Issues," Contemporary Economic Policy, Western Economic Association International, vol. 12(3), pages 54-66, July.
    2. Mohsin S. Khan, 1985. "An Analytical Approach to Interest Rate Determination in Developing Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 24(3-4), pages 481-495.
    3. Montiel, Peter J, 1994. "Capital Mobility in Developing Countries: Some Measurement Issues and Empirical Estimates," World Bank Economic Review, World Bank Group, vol. 8(3), pages 311-350, September.
    4. Kouri, Pentti J K & Porter, Michael G, 1974. "International Capital Flows and Portfolio Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 443-467, May/June.
    5. Sebastian Edwards & Mohsin S. Khan, 1985. "Interest Rate Determination in Developing Countries: A Conceptual Framework," NBER Working Papers 1531, National Bureau of Economic Research, Inc.
    6. Reinhart, Carmen & Khan, Mohsin, 1995. "Capital Flows in the APEC Region," MPRA Paper 8200, University Library of Munich, Germany.
    7. Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1995. "Capital inflows to Latin America with reference to the Asian experience," MPRA Paper 13840, University Library of Munich, Germany.
    8. Owen Evens & Peter J. Quirk, 1995. "Capital Account Convertibility; Review of Experience and Implications for IMF Policies," IMF Occasional Papers 131, International Monetary Fund.
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    Citations

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    Cited by:

    1. Renu Kohli, 2001. "Capital Flows and Their Macroeconomic Effects in India," IMF Working Papers 01/192, International Monetary Fund.
    2. Ramkishen S. Rejan, 1998. "The Currency And Financial Crisis In Southeast Asia - A Case Of `Sudden Deathã¢Â‚¬Â„¢ Or `Death Foretoldã¢Â‚¬Â„¢," Macroeconomics Working Papers 22381, East Asian Bureau of Economic Research.
    3. Juan Antonio Montecino & Jose Antonio Cordero, 2010. "Capital Controls and Monetary Policy in Developing Countries," CEPR Reports and Issue Briefs 2010-10, Center for Economic and Policy Research (CEPR).
    4. Milesi-Ferreti, G-M & Razin, A, 1997. "Current Account Deficits and Capital Flows in East Asia and Latin America : Are the Nineties Different from the Early Eighties?," Papers 11-97, Tel Aviv.
    5. Renu Kohli, 2004. "Capital Flows and Domestic Financial Sector in India," International Finance 0405012, EconWPA.
    6. Maehara, Yasuhiro, 1998. "Financial stability in Southeast Asia," Journal of Asian Economics, Elsevier, vol. 9(2), pages 227-235.
    7. Renu Kohli, 2004. "Capital Account Liberalisation: Empirical Evidence and Policy Capital Account Liberalisation: Empirical Evidence and Policy Issues - I," International Finance 0405008, EconWPA.
    8. Gian Maria Milesi Ferretti & Assaf Razin, 1999. "Current Account Deficits and Capital Flows in East Asia and Latin America: Are the Early Nineties Different From the Early Eighties," NBER Chapters,in: Changes in Exchange Rates in Rapidly Developing Countries: Theory, Practice, and Policy Issues (NBER-EASE volume 7), pages 57-108 National Bureau of Economic Research, Inc.
    9. Steven B. Kamin & Paul R. Wood, 1997. "Capital inflows, financial intermediation, and aggregate demand," International Finance Discussion Papers 583, Board of Governors of the Federal Reserve System (U.S.).

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