openness reduce monetary policy autonomy and increase exchange rate stability, confirming the constraints of the monetary …

"surges" and "stops" (sharp increases and decreases, respectively, of gross inflows) and "flight" and "retrenchment" (sharp … different theoretical approaches explaining crises and capital flow volatility …

inflows during boom times reduces the potential outflows during busts. This mitigates the feedback effects of deleveraging … reinforcing effects. In our model, capital controls reduce macroeconomic volatility and increase standard measures of consumer …

sudden stop of capital inflows. Can monetary policy offset this external credit squeeze? We show that although this may be … the case during moderate contractions (or in partial equilibrium), the expansionary effect of monetary policy vanishes … domestic financial markets is consistent with the external constraint. An expansionary monetary policy in this context raises …

Emerging economies experience sudden stops in capital inflows. As we have argued in Caballero and Krishnamurthy (2002 …), having access to monetary policy during these sudden stops is useful, but mostly for insurance' rather than for aggregate … demand reasons. In this environment, a central bank that cannot commit to monetary policy choices will ignore the insurance …

We study the ways domestic and external global factors (such as risk appetite, global liquidity, U.S. monetary policy … muted, short-term gross portfolio inflows and outflows comprise important factors that account for exchange market pressure …

, which inhibit the transmission of these shocks across countries. We derive an optimal monetary policy response to a global …The 'International Policy Trilemma' refers to the constraint on independent monetary policy that is forced on a country … international policy trilemma. International financial market openness may render monetary policy ineffective, even within a system …

, but makes this volatility less sensitive to external shocks … inflows. We focus on Chile's experience during the 1990s and investigate whether controls on capital inflows reduced Chile …'s vulnerability to external shocks. We recognize that changes in the controls will affect the way in which different macro variables …

The large asset price jumps that took place during 2008 and 2009 disrupted volatility derivatives markets and caused …