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Capital Account Policies and the Real Exchange Rate
Jeanne, Olivier - 2012
This paper presents a simple model of how a small open economy can undervalue its real exchange rate using its capital account policies. The paper presents several properties of such policies, and proposes a rule of thumb to assess their welfare cost. The model is applied to an analysis of...
Persistent link: https://www.econbiz.de/10013100363
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Optimal Capital Controls and Real Exchange Rate Policies : A Pecuniary Externality Perspective
Benigno, Gianluca - 2016
A new theoretical literature studies the use of capital controls to prevent financial crises in models in which pecuniary externalities justify government intervention. Within the same theoretical framework, we show that when ex-post policies such as defending the exchange rate can contain or...
Persistent link: https://www.econbiz.de/10012992657
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Terms of Trade Disturbances, Real Exchange Rates and Welfare : the Role of Capital Controls and Labor Market Distortions
Edwards, Sebastian; Ostry, Jonathan D. - 2021
Many arguments that have been advanced in favor of maintaining capital control within the EEC have not paid sufficient attention to the welfare consequences of this type of market intervention. Our paper provides a simple, optimizing framework in which the welfare consequences of capital...
Persistent link: https://www.econbiz.de/10013223860
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Capital Controls and the Real Exchange Rate
van Wijnbergen, Sweder - 2021
Using an intertemporal, two-country general equilibrium model, I demonstrate that international asymmetries in expenditure patterns determine the real exchange rate effects of capital controls. Capital import taxes lower world interest rates, but raise home interest rates. These changes in...
Persistent link: https://www.econbiz.de/10013246280
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Capital Controls and Financial Crises
Aizenman, Joshua - 2021
The purpose of this paper is to explain the reluctance of developing countries to open up their capital market to foreigners, and the conditions inducing an emerging market economy to switch its policies. We consider an economy characterized initially by a one-sided openness to the capital...
Persistent link: https://www.econbiz.de/10013238933
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Financial Policies and the Prevention of Financial Crises in Emerging Market Countries
Mishkin, Frederic S. - 2021
This paper outlines a set of financial policies that can help make financial crises less likely in emerging market countries. To justify these policies, the paper first explains what a financial crisis is, the factors that promote a financial crisis and the dynamics of a financial crisis. It...
Persistent link: https://www.econbiz.de/10013248397
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Capital Controls or Macroprudential Regulation?
Korinek, Anton - 2015
We examine the effectiveness of capital controls versus macroprudential regulation in reducing financial fragility in a small open economy model in which there is excessive borrowing because of externalities associated with financial crises and contractionary exchange rate depreciations. We find...
Persistent link: https://www.econbiz.de/10013031032
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International Credit Flows and Pecuniary Externalities
Brunnermeier, Markus K. - 2015
This paper develops a dynamic two-country neoclassical stochastic growth model with incomplete markets. Short-term credit flows can be excessive and reverse suddenly. The equilibrium outcome is constrained inefficient due to pecuniary externalities. First, an undercapitalized country borrows too...
Persistent link: https://www.econbiz.de/10013031034
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Real Exchange Rate Overshooting and the Output Cost of Bringing Down Inflation
Buiter, Willem H.; Miller, Marcus H. - 2021
rate. One of the virtues claimed for such exchange rate 'overshooting', however, is its immediate effect on the price level … nominal inertia in both the level of labor costs and their trend or core rate of growth, this early overshooting of the …. Relative to other policies which achieve the same effect on steady-state inflation, exchange rate overshooting brings inflation …
Persistent link: https://www.econbiz.de/10013218979
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Financial Globalization, Financial Crises, and the External Portfolio Structure of Emerging Markets
Mendoza, Enrique G. - 2013
displays overshooting: It rises sharply initially and then falls sharply but remains positive in the long run. While equity …
Persistent link: https://www.econbiz.de/10013081498