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Capital flows and their effect on the monetary base

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  • Reisen, Helmut

Abstract

The large capital inflows into some Latin American countries since 1990 are a mixed blessing, for they widen the trade-off between disinflation at home and competitiveness abroad. A large part of the flows seems to be temporary rather than permanent. Permanent flows should be accommodated by an upward float of the currency, temporary flows by sterilized intervention on the foreign exchange market. Recent evidence suggests that sterilized intervention is more effective and carries lower fiscal costs than is often maintained. Asian policy practice suggests ways of sterilized intervention even with underdeveloped securities markets.

Suggested Citation

  • Reisen, Helmut, 1993. "Capital flows and their effect on the monetary base," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    • Handle: RePEc:ecr:col070:10469
    Note: Includes bibliography
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    File URL: http://repositorio.cepal.org/handle/11362/10469
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    Cited by:

    1. M S Mohanty & Philip Turner, 2005. "Intervention: what are the domestic consequences?," BIS Papers chapters, in: Bank for International Settlements (ed.), Foreign exchange market intervention in emerging markets: motives, techniques and implications, volume 24, pages 56-81, Bank for International Settlements.
    2. Waheed, Muhammad, 2010. "Foreign exchange intervention and sterilization: an investigation of State Bank of Pakistan’s Reaction Function," MPRA Paper 33161, University Library of Munich, Germany.
    3. Grabel, Ilene, 1996. "Marketing the third world: The contradictions of portfolio investment in the global economy," World Development, Elsevier, vol. 24(11), pages 1761-1776, November.
    4. Nurhan YENTÜRK, 1999. "SHORT-TERM CAPITAL INFLOWS AND THEIR IMPACT ON MACROECONOMIC STRUCTURE: TURKEY IN THE 1990s," The Developing Economies, Institute of Developing Economies, vol. 37(1), pages 89-113, March.
    5. Waheed, Muhammad, 2007. "Central bank intervention, sterilization and monetary independence: the case of Pakistan," MPRA Paper 2328, University Library of Munich, Germany, revised Mar 2007.
    6. Ffrench-Davis, Ricardo, 1999. "The role of domestic polices in stabilizing capital flows," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 32986, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    7. Timothy Bond, 1998. "Capital Flows to Asia: The Role of Monetary Policy," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 25(2), pages 165-182, January.

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