Endogenous inflows of speculative capital and the optimal currency appreciation path

RMB Revaluation and Speculative Capital Inflows: Policy Options

We build a monetary model to show how expected revaluations lead to the instability of a pegged exchange rate regime. This model assumes current account convertibility and some degree of capital control, and fundamentally sound domestic policies and economy, as is the case in China. The model demonstrates that market-oriented interest rates can act as an automatic stabilizer to ease revaluation...

Currency Appreciation and Current Account Adjustment

Global current account imbalances, more specifically the large deficit in the United States and the surplus in China and some other Asian economies, continue to attract considerable attention both among policy makers and academics. While the academic literature has focused predominantly on the sustainability of the imbalance and on the exchange-rate consequences of its elimination, many policy ...

Foreign Capital Inflows and Economic Growth of Iran

Nowadays, Foreign Capital Inflows (FCIs) are considered as a catalyst for economic development and an important source of transferring technology and foreign exchange earnings from developed to developing countries. The purpose of this paper is to estimate the impact of FCIs (which include foreign direct investment, personal remittances and official development investment) on economic growth in...

Capital inflows and investment in developing countries

Capital Inflows , Liquidity and Bubbles Guillermo

Policymakers in Emerging Market economies (EMs) are facing a serious dilemma: while their economies are currently benefiting from a surge of capital inflows, they fear a replay of the 1990s and early 2000s when their economies underwent costly Sudden Stops (of capital inflows). A serious concern is that a capital‐inflow episode could give rise to "bubbles," i.e., an artificial or transitory inc...