The workhorse open-economy macro model suggests that capital inflows are contractionary because they appreciate the currency and reduce net exports. Emerging-market policymakers however believe that inflows lead to credit booms and rising output, and the evidence appears to go their way. To...

The workhorse open-economy macro model suggests that capital inflows are contractionary because they appreciate the currency and reduce net exports. Emerging market policy makers however believe that inflows lead to credit booms and rising output, and the evidence appears to go their way. To...

The workhorse open-economy macro model suggests that capital inflows are contractionary because they appreciate the currency and reduce net exports. Emerging market policy makers however believe that inflows lead to credit booms and rising output, and the evidence appears to go their way. To...

The workhorse open-economy macro model suggests that capital inflows are contractionary because they appreciate the currency and reduce net exports. Emerging market policy makers however believe that inflows lead to credit booms and rising output, and the evidence appears to go their way. To...

Although few would doubt that very high inflation is bad for growth, there is much less agreement about moderate inflation’s effects. Using panel regressions and a nonlinear specification, this paper finds a statistically and economically significant negative relationship between inflation and...

The growing integration of world capital markets has made it fashionable to argue that only extreme exchange rate regimes are sustainable. Short of adopting a common currency, currency board arrangements represent the most extreme form of exchange rate peg. This paper compares the macroeconomic...

Sharp exchange rate depreciations in the East Asian crisis countries (Indonesia, Korea, and Thailand) raised doubts about the efficacy of increasing interest rates to defend the currency. Using a standard monetary model of exchange rate determination, this paper shows that tighter monetary...

This paper examines whether expansionary credit policy can help sustain output growth in transition economies, with particular reference to Ukraine’s experience since 1992. We find that, while real credit growth is indeed associated with higher output growth, an increase in the growth rate of...

While capital flows to emerging markets bring numerous benefits, they are also known to create macroeconomic imbalances (economic overheating, currency overvaluation) and increase financial vulnerabilities (domestic credit growth, bank leverage, foreign currency-denominated lending). But are all...