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Dealing with Exchange Rate Issues: Reserves or Capital Controls?

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  • Raquel Almeida Ramos

    () (IPC-IG)

Abstract

Developing countries? positions regarding the capital account have changed significantly in the last decade. After a period of wide liberalisation, country authorities have now been constantly increasing their policy toolkit with new instruments to intervene in the capital account and limit the consequences of excessively volatile capital flows. This change is a response to the increasing size and volatility of capital flows, which is associated with the process of financialisation that has been taking place in recent decades, where financial actors and motives have assumed more important roles. The increasing magnitude and volatility of finance-related flows are clearly shown in Figure 1, which presents the net financial flows excluding Foreign Direct Investment (FDI) received by developing and emerging countries since 1990. (?)

Suggested Citation

  • Raquel Almeida Ramos, 2012. "Dealing with Exchange Rate Issues: Reserves or Capital Controls?," Policy Research Brief 32, International Policy Centre for Inclusive Growth.
  • Handle: RePEc:ipc:pbrief:32
    as

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    File URL: http://www.ipc-undp.org/pub/IPCPolicyResearchBrief32.pdf
    File Function: First version, 2012
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    References listed on IDEAS

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    1. Forbes, Kristin & Fratzscher, Marcel & Kostka, Thomas & Straub, Roland, 2016. "Bubble thy neighbour: Portfolio effects and externalities from capital controls," Journal of International Economics, Elsevier, pages 85-104.
    2. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 379-408.
    3. Nicolas Magud & Carmen M. Reinhart, 2007. "Capital Controls: An Evaluation," NBER Chapters,in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, pages 645-674 National Bureau of Economic Research, Inc.
    4. Barry Eichengreen & Ricardo Hausmann & Ugo Panizza, 2003. "Currency Mismatches, Debt Intolerance and Original Sin: Why They Are Not the Same and Why it Matters," NBER Working Papers 10036, National Bureau of Economic Research, Inc.
    5. Amartya Lahiri & Carlos A. Végh, 2002. "Living with the Fear of Floating: An Optimal Policy Perspective," NBER Chapters,in: Preventing Currency Crises in Emerging Markets, pages 663-704 National Bureau of Economic Research, Inc.
    6. Raquel Almeida Ramos, 2012. "Financial Flows and Exchange Rates: Challenges Faced by Developing Countries," Working Papers 97, International Policy Centre for Inclusive Growth.
    7. Stanley Fischer, 2001. "Exchange Rate Regimes: Is the Bipolar View Correct?," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 3-24, Spring.
    8. Akira Ariyoshi & Andrei A Kirilenko & Inci Ötker & Bernard J Laurens & Jorge I Canales Kriljenko & Karl F Habermeier, 2000. "Capital Controls; Country Experiences with Their Use and Liberalization," IMF Occasional Papers 190, International Monetary Fund.
    9. Christopher J. Neely, 1999. "An introduction to capital controls," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 13-30.
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    Cited by:

    1. Raquel Almeida Ramos, 2012. "Financial Flows and Exchange Rates: Challenges Faced by Developing Countries," Working Papers 97, International Policy Centre for Inclusive Growth.

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    Dealing with Exchange Rate Issues: Reserves or Capital Controls?;

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