International Trade and Finance Association Working Papers 2008
Capital Flow Paradox, Speculation And External Adjustment In Emerging Market EconomiesMassimiliano La Marca, United Nations Conference on Trade and Development Download the Paper (PDF format) - August 15, 2008 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing. ABSTRACT: The paper provides some evidence on the current pattern of current account imbalances, real exchange rate and growth in emerging market economies and offers an interpretation to the fact that fast-growing economies tend to run small current account deficits or surpluses while preserving a non overvalued real exchange rate. The evidence that some speculative capital flows induced by domestic monetary policies may bring the exchange rate on a path inconsistent with an improvement of the external position provides a basis for a reconsideration of monetary and exchange rate policies at the national and international level. This paper was presented May 22, 2008, at the 18th International Conference of the International Trade and Finance Association meeting at Universidade Nova de Lisboa, Lisbon, Portugal. Keywords: foreign exchange rate, capital flows, growth, carry trade. JEL Classification: F31, F32, G15 SUGGESTED CITATION:
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