Description

Although capital inflows are generally beneficial to recipient countries, they also pose a challenge for the conduct of economic policy. This paper proposes a conceptual taxonomy to guide the design of policy responses in the face of capital flows. We explore how responses to capital surges should be differentiated based on the source of balance of payments pressures. We also examine whether the policy choices in emerging market countries conform to the taxonomy's predictions and find some correspondence, especially during periods of high global liquidity.

Taxonomy

Balance of payments , Economic policy

More publications in this series: Policy Discussion Papers

More publications by: Bikas Joshi ; Manuela Goretti ; Uma Ramakrishnan ; Alun H Thomas ; Atish R Ghosh ; Juan Zalduendo