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Capital Flows in Central and Eastern Europe: Evidence and Policy Options

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  • Mr. Carlos A. Végh Gramont
  • Ms. Ratna Sahay
  • Mr. Guillermo Calvo

Abstract

This paper examines the nature and composition of capital flows in selected countries in Central and Eastern Europe during 1987–93. The data show that there was a remarkable turnaround in the capital account in 1992–93. This improvement was accompanied by widening current account deficits, an increase in real consumption, and real exchange rate appreciation. In light of these developments, the paper discusses the main macroeconomic concerns raised by capital inflows and lays out the principal policy options relevant for the transition economies.

Suggested Citation

  • Mr. Carlos A. Végh Gramont & Ms. Ratna Sahay & Mr. Guillermo Calvo, 1995. "Capital Flows in Central and Eastern Europe: Evidence and Policy Options," IMF Working Papers 1995/057, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1995/057
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    References listed on IDEAS

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    1. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1996. "Inflows of Capital to Developing Countries in the 1990s," Journal of Economic Perspectives, American Economic Association, vol. 10(2), pages 123-139, Spring.
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    Cited by:

    1. Grafe, Clemens & Wyplosz, Charles, 1997. "The Real Exchange Rate in Transition Economies," CEPR Discussion Papers 1773, C.E.P.R. Discussion Papers.
    2. Mr. Ashoka Mody & Ms. Ratna Sahay & Mr. Thomas Helbling, 2004. "Debt Accumulation in the CIS-7 Countries: Bad Luck, Bad Policies, or Bad Advice?," IMF Working Papers 2004/093, International Monetary Fund.
    3. Reinhart, Carmen M & Reinhart, Vincent R, 1999. "On the Use of Reserve Requirements in Dealing with Capital Flow Problems," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 4(1), pages 27-54, January.
    4. Angelos A. Antzoulatos, 1996. "Capital flows & current account deficits in the 1990s: why did Latin America & East Asian countries respond differently?," Research Paper 9610, Federal Reserve Bank of New York.
    5. Krkoska, Libor, 1999. "A Neoclassical Growth Model Applied to Transition in Central Europe," Journal of Comparative Economics, Elsevier, vol. 27(2), pages 259-280, June.
    6. Mr. Peter S. Heller, 1997. "Fiscal Policy Management in an Open Capital Regime," IMF Working Papers 1997/020, International Monetary Fund.
    7. Ulrich Thießen, 1996. "Außenwirtschaftliche Aspekte des Transformations- und Entwicklungsprozesses in der Ukraine," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 65(2), pages 219-234.
    8. Claudia Buch, 1999. "Capital mobility and EU enlargement," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 135(4), pages 629-656, December.
    9. Nouriel Roubini & Paul Wachtel, 1997. "Current Account Sustainability in Transition Economies," Working Papers 97-03, New York University, Leonard N. Stern School of Business, Department of Economics.
    10. Mr. Christoph B. Rosenberg & Mr. Tapio Saavalainen, 1998. "How to Deal with Azerbaijan’s Oil Boom? Policy Strategies in a Resource-Rich Transition Economy," IMF Working Papers 1998/006, International Monetary Fund.
    11. Domenico Mario Nuti, 1996. "Inflation, interest and exchange rates in the transition1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(1), pages 137-158, May.
    12. Drabek, Zdenek & Griffith-Jones, Stephany, 1998. "Managing capital flows in transition economies with a case-study of Central and Eastern Europe," WTO Staff Working Papers ERAD-98-04, World Trade Organization (WTO), Economic Research and Statistics Division.
    13. Mohsin S. Khan, 1998. "Capital Flows to Developing Countries: Blessing or Curse?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(4), pages 125-151.
    14. Pierre L. Siklos, 2000. "Capital flows in a transitional economy and the sterilization dilemma: The hungarian experience, 1992–97," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 3(4), pages 373-392.
    15. Mohamed Isse Ibrahim & Zahir Mohamed Omar & Ali Yassin Sheikh Ali3, 2017. "The Determinants of Foreign Direct Investment in Somalia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 713-720.
    16. Denizer, Cevdet, 1997. "Stabilization, adjustment, and growth prospects in transition economies," Policy Research Working Paper Series 1855, The World Bank.
    17. Cynthia Benzing, 2001. "Capital flows and financial crises: Theory versus realityCapital flows and financial crises Edited by Miles Kahler Cornell University Press, 1998, 268 pp," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 29(1), pages 107-112, March.
    18. Françoise Lemoine, 1996. "Trade Policy and Trade Patterns During Transition: a Comparison Between China and the CEECs," Working Papers 1996-02, CEPII research center.
    19. Louis Kasekende & Damoni Kitabire & Matthew Martin, 1998. "Capital Inflows and Macroeconomic Policy in Sub-Saharan Africa," Macroeconomics 9809005, University Library of Munich, Germany.
    20. Angelos A. Antzoulatos, 1997. "On the determinants and resilience of bond flows to LDCs, 1990-1995: evidence from Argentina, Brazil and Mexico," Research Paper 9703, Federal Reserve Bank of New York.
    21. Goldstein, Morris, 1995. "Coping with too much of a good thing : policy responses for large capital inflows in developing countries," Policy Research Working Paper Series 1507, The World Bank.

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