By Sebastian Edwards
Some students argue that the loose circulation of capital throughout borders complements welfare; others declare it represents a transparent peril, specially for rising countries. In Capital Controls and Capital Flows in rising Economies, an esteemed team of individuals examines either the benefits and the pitfalls of proscribing capital mobility in those rising nations.
In the aftermath of the East Asian foreign money crises of 1997, the authors reflect on mechanisms that 8 international locations have used to regulate capital inflows and assessment their effectiveness in changing the adulthood of the ensuing exterior debt and decreasing macroeconomic vulnerability. This quantity is key analyzing for all these drawn to rising international locations and the prices and advantages of proscribing foreign capital flows.
Read or Download Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences (National Bureau of Economic Research Conference Report) PDF
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Extra resources for Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences (National Bureau of Economic Research Conference Report)
1 However, there is no consensus. This is mainly due to the fact that diﬀerent researchers focus on diﬀerent samples of countries (Organization for Economic Cooperation and Development [OECD] countries versus emerging markets), diﬀerent time periods (1970s versus 1980s versus 1990s), and diﬀerent forms of capital flows (foreign direct investment/portfolio equity flows versus debt flows or public flows versus private flows). For example, Calvo, Leiderman, and Reinhart (1996) focus on the role of external (push) and internal (pull) factors as potential determinants of foreign investment using a cross section of developing countries.
Dollar value of the domestic stock market. KLSV argue against the valuation of stocks using financial market prices, maintaining that capital listed on the stock market and the corresponding share prices—especially in developing countries—are not representative of the stock of capital of a country or of the value of a firm. Instead, they use the price of investment goods in local currency, which is the investment deflator. They also adjust for exchange rate changes. LM found the correlation between the first diﬀerence of foreign claims on capital and current account to be generally high but significantly below unity for several countries, confirming the importance of valuation adjustments.
The authors thank Franklin Allen, Sebastian Edwards, Martin Feldstein, Jeﬀ Frieden, Gerd Haeusler, Ayhan Kose, Gian Maria Milesi-Ferretti, Simon Johnson, David Papell, Eswar Prasad, Nouriel Roubini, Bent Sorensen, and participants at the NBER Conference on International Capital Flows and the Federal Reserve Bank of New York Conference on Financial Globalization for valuable comments and suggestions. 19 20 Laura Alfaro, Sebnem Kalemli-Ozcan, and Vadym Volosovych cial integration might outweigh its benefits (Bhagwati 1998).