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Capital flows and capital account management in selected Asian economies

Author

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  • Abhijit SenGupta

    (Asian Development Bank)

  • Rajeswari Sengupta

    (Indira Gandhi Institute of Development Research)

Abstract

Gross capital in ows and out ows to and from emerging market economies (EMEs) have witnessed a signilcant increase since early 2000s. This rapid increase in the volume of ows accompanied by sharp swings in volatility has ampliled the complexity of macroeconomic management in EMEs. While capital in ows provide additional financing for productive investment and oker avenues for risk diversication, unbridled ows could also exacerbate lnancial instability. In this paper we focus on the evolution of capital ows in a few select emerging Asian economies, and analyze surge and stop episodes a well as changes in the composition of ows across these episodes. We also provide a comprehensive description of the capital account management policies adopted by the host countries and evaluate the efcacy of these measures by analyzing whether they achieved the desired goals.This kind of an analysis is highly relevant especially a time when EMEs around the world are about to face the repercussions of a potential Quantitative Easing (QE) tapering by the US or launch of fresh QE measures by the Euro-zone, either of which could once again heighten the volatility of cross-border capital ows thereby posing renewed macroeconomic challenges for major EMEs.

Suggested Citation

  • Abhijit SenGupta & Rajeswari Sengupta, 2014. "Capital flows and capital account management in selected Asian economies," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-040, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2014-040
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    Cited by:

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    2. Guzman, Martin & Ocampo, Jose Antonio & Stiglitz, Joseph E., 2018. "Real exchange rate policies for economic development," World Development, Elsevier, vol. 110(C), pages 51-62.
    3. Chokri Zehri, 2022. "Interaction Effect of Capital Controls and Macroeconomic Policies," Economic Papers, The Economic Society of Australia, vol. 41(1), pages 15-33, March.

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    More about this item

    Keywords

    Capital ows; Exchange market pressure; Impossible Trinity; Sterilized intervention; Capital controls; Global lnancial crisis;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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