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Capital Inflows, Exchange Rate Flexibility, and Domestic Credit

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  • Reinhart, Carmen

Abstract

Protracted expansionary monetary policies in advanced countries have renewed the debate over policy options to cope with large capital inflows that drive credit expansions in emerging economies. In a forthcoming paper, we show that during capital inflow bonanzas credit grows more rapidly and its composition tilts to foreign currency in economies with less flexible exchange rate regimes. Hence, carefully crafted macro-prudential measures may complement macroeconomic policies.

Suggested Citation

  • Reinhart, Carmen, 2012. "Capital Inflows, Exchange Rate Flexibility, and Domestic Credit," MPRA Paper 51263, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:51263
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    References listed on IDEAS

    as
    1. Graciela L. Kaminsky & Carmen M. Reinhart & Carlos A. Végh, 2005. "When It Rains, It Pours: Procyclical Capital Flows and Macroeconomic Policies," NBER Chapters, in: NBER Macroeconomics Annual 2004, Volume 19, pages 11-82, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    capital inflows; exchange rates; credit; banks; vulnerability; macroprudential; capital controls;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General
    • F2 - International Economics - - International Factor Movements and International Business
    • F3 - International Economics - - International Finance
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • G01 - Financial Economics - - General - - - Financial Crises
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East
    • N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean

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