scholarly journals Sudden Stops and Capital Controls: When to Apply in Turkey

2016 ◽  
Vol 8 (4) ◽  
pp. 289
Author(s):  
Cenk Gokce Adas ◽  
F. Yesim Kartalli
Keyword(s):  
Emerging Market ◽  
Theoretical Background ◽  
Capital Inflows ◽  
Sudden Stops ◽  
Control Mechanisms ◽  
Capital Movements ◽  
Emerging Market Countries ◽  
Institutional Structures ◽  
Domestic Savings ◽  
Before And After

Emerging market countries need capital inflows to finance their current account deficits since their domestic savings are not at desired levels. Foreign direct investment is the appreciated form of capital inflows. However, indirect capital inflows can also boost growth if used in a proper manner. If a country has weak fundamentals and institutional structures or there exists an external shock, speculative foreign capital can easily and rapidly fly away while leaving a financial crisis behind. In this study, we summarize the theoretical background of sudden stops, and then try to identify the sudden stops in Turkey for 1996-2009 period and question the reasons of such disruptions. We particularly focus on periods just before and after the global financial crises. To identify a sudden stop period we use “means” and “volatilities” as well as changes in capital inflows/GDP ratios. Finally, we attempt to find out inflow control mechanisms to minimize the volatility of capital movements.

Statement by the Managing Director to the International Monetary and Financial Committee on the Fund’s Policy Agenda

Policy Papers ◽  
2010 ◽  
Vol 2010 (46) ◽  
Author(s):  
Keyword(s):  
Economic Policy ◽  
Economic Activity ◽  
Emerging Market ◽  
Capital Inflows ◽  
Policy Agenda ◽  
Prudential Regulation ◽  
High Unemployment ◽  
Cross Border ◽  
Emerging Market Countries ◽  
The World

Although the global recovery continues to move ahead, it remains fragile and uneven, with continued high unemployment. Many countries are emerging from the crisis with high debt burdens, low growth, and still fragile financial sectors. At the same time, economic activity in many emerging market countries has picked up, attracting large capital inflows that challenge economic policy. Important steps have been taken to make financial sectors safer around the world, but the unfinished agenda is still substantial, particularly for cross-border finance and macro-prudential regulation. All this suggests serious vulnerabilities and challenges remain, requiring continued policy cooperation and collaboration.

Statement by the Managing Director on the Work Program of the Executive Board - Executive Board Meeting, November 22, 2010

Policy Papers ◽  
2010 ◽  
Vol 2010 (82) ◽  
Author(s):  
Keyword(s):  
Employment Growth ◽  
Emerging Market ◽  
Capital Inflows ◽  
Economic Recovery ◽  
Board Meeting ◽  
Executive Board ◽  
Work Program ◽  
Emerging Market Countries ◽  
Sustainable Recovery ◽  
Global Growth

Persistent challenges: The multi-speed nature of the global economic recovery is testing the system, with strains already appearing in the form of large capital inflows to many emerging market countries and exchange rate pressures. At the same time, slow employment growth, high indebtedness, and remaining financial sector fragilities in some countries could yet derail a fragile recovery. Only cooperative approaches will succeed in relieving tensions and building a strong and sustainable recovery, based on a more balanced pattern of global growth.

scholarly journals The Interaction of Macroeconomic Variables on Capital Inflow in Emerging Market Countries in ASEAN: Panel Error Correction Model Approach

2019 ◽  
pp. 1357-1364
Author(s):  
Hasdi Aimon ◽  
Rika Utami Restihani ◽  
Anggi Putri Kurniadi
Keyword(s):  
Error Correction ◽  
Emerging Market ◽  
Error Correction Model ◽  
Capital Inflow ◽  
Capital Inflows ◽  
Short Term ◽  
Return To Equilibrium ◽  
Correction Model ◽  
Emerging Market Countries

This study investigates the short and long-term determinants of capital inflows in emerging market countries in ASEAN using the Panel Error Correction Model. This study uses panel data with a time series from 2000 to 2017 and a cross-section of five countries (Indonesia, Malaysia, Philippines, Thailand, and Vietnam). This study has three important findings. First, conditions of exchange rate, foreign reserve, and lending rate disrupt the equilibrium of capital inflow in the short term. Second, current account conditions disrupt the equilibrium in the long term. Third, capital inflow will return to equilibrium in the long term. Therefore, it is highly recommended for emerging market countries in ASEAN to stabilize the variables that disrupt the equilibrium in the long and short term to stabilize their capital inflow.

CHOICES OF OPTIMAL MONETARY POLICY INSTRUMENTS UNDER THE FLOATING AND THE BASKET-PEG REGIMES

2012 ◽  
Vol 57 (04) ◽  
pp. 1250024 ◽  
Author(s):  
NAOYUKI YOSHINO ◽  
SAHOKO KAJI ◽  
TAMON ASONUMA
Keyword(s):  
Emerging Market ◽  
Policy Instruments ◽  
Policy Instrument ◽  
Dynamic Stochastic General Equilibrium ◽  
Optimal Monetary Policy ◽  
Capital Movements ◽  
Emerging Market Countries ◽  
Welfare Losses ◽  
Practical Usefulness ◽  
Dynamic Stochastic

This paper determines whether adopting the basket-peg rather than the floating regime is optimal for emerging market countries. Under the basket-peg regime, there is a trade-off between practical usefulness and welfare losses associated with capital movements across countries. We develop a dynamic stochastic general equilibrium model for small open economies to derive a simple basket weight rule. Although this is suboptimal, we find it practical and easy to implement. With calibration using Singaporean and Thai data for 1997Q3–2006Q2 and comparison among cumulative losses associated with the policy instrument rules, we show that a commitment to the basket weight rule is superior to other instrument rules under the floating regime for small, open emerging market countries like Singapore and Thailand.

scholarly journals Credit Rating Downgrades and Sudden Stops of Capital Flows in the Eurozone

2017 ◽  
Vol 08 (03) ◽  
pp. 1750016 ◽  
Author(s):  
Stefanos Ioannou
Keyword(s):  
Credit Rating ◽  
Probit Model ◽  
Capital Inflows ◽  
Sudden Stops ◽  
Qualitative Aspect ◽  
Short Term ◽  
Capital Movements ◽  
The Impact ◽  
Rating Downgrades

The current paper investigates the impact of sovereign ratings on sudden stops of capital in the context of the Eurozone. Our analysis focuses on the qualitative aspect of ratings on the hypothesis that such aspect has a concrete impact on capital movements. A panel probit model is utilized for our purposes. We distinguish between net and gross capital inflows, while we also draw a distinction between long-term and short-term oriented capital. Our results confirm the influence of sovereign ratings for the majority of our model specifications. They also appear to be most significant in the case of short-term flows.

scholarly journals ASSET PRICE SHOCK RESPONSE TO SHOCK CAPITAL FLOW, EXCHANGE RATE AND INTEREST RATE: CASE STUDY OF 16 EMERGING MARKET COUNTRIES

2017 ◽  
Vol 1 (2) ◽  
pp. 14
Author(s):  
Rachman Guswardi
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Interest Rates ◽  
Capital Flows ◽  
Asset Prices ◽  
Emerging Market ◽  
Capital Inflows ◽  
Emerging Market Countries ◽  
The Exchange Rate ◽  
Positive Shock

Capital flows to developing countries and emerging markets in the world is constantly increasing. However, the crisis that occurred in 2008 and 2011 caused concern for investors. A series of policies have been carried out in several emerging market countries to take steps prudence in controlling capital flows. This study aimed to analyze the response of asset prices to the shock caused by capital inflows, interest rates and exchange rates and analyzes the contribution of shock in capital inflows, interest rates and exchange rates on asset prices in 16 emerging market countries (India, Brazil, Russia, Indonesia, Republic of South Africa, Mexico, Thailand, South Korea, Colombia, Philippines, Egypt, Hong Kong, Peru, Czech, Bangladesh, Hungary) in the year 2001-2015. The method used is quantitative method using Panel Vector Auto Regression models. The results of this study show that the first shock of positive capital inflows will affect asset prices, both that a positive shock on interest rates will affect asset prices, the third that the positive shock of the exchange rate would affect asset prices. The variables that have the biggest contribution in influencing asset prices is the exchange rate which further interest rates and the smallest is the capital inflows.

scholarly journals DETERMINANTS OF FINANCIAL DEVELOPMENT: IMPACT OF HUMAN CAPITAL IN EMERGING MARKETS COUNTRIES

TRIKONOMIKA ◽  
2021 ◽  
Vol 20 (2) ◽  
pp. 97-104
Author(s):  
Syafira Illaina Maghfiroh ◽  
Rudi Purwono
Keyword(s):  
Human Capital ◽  
Financial Development ◽  
Emerging Market ◽  
Trade Openness ◽  
Government Expenditure ◽  
Method Of Moment ◽  
Emerging Market Countries ◽  
Domestic Savings

This study aims to examine determinants of financial development and see role of quality of human capital in financial development in 19 Emerging Market countries during 2008-2017. Financial development in this study is proxied using the financial development index to accommodate multi-dimensional of financial development. Estimation is using the dynamic panel method Generalize Method of Moment (GMM). The results show that the quality of human capital has contributed to increasing financial development in emerging market countries in 2008-2017. Meanwhile, trade openness and government expenditure do not have a statistically significant effect and domestic savings have a significant positive effect on financial development.

scholarly journals The Impact of International Capital Flows on Central and Eastern European Countries’ Investments, Savings, Consumption, and Current Accounts

2020 ◽  
Vol 31 (4) ◽  
pp. 450-460
Author(s):  
Laura Vilutiene ◽  
Daiva Dumciuviene
Keyword(s):  
Capital Flows ◽  
Emerging Market ◽  
Developed Countries ◽  
International Capital Flows ◽  
Capital Inflows ◽  
Eastern European ◽  
International Capital ◽  
Domestic Savings ◽  
National Economies ◽  
The Impact

Capital flows have been analysed from various perspectives and yet no consensus has been reached about the impact of international capital flows on national economies. The main aim of this paper is to present the theoretical aspects of the effect of international capital flows on national economies, and to analyse the impact of international capital flows on Central and Eastern European (CEE) countries’ domestic savings, investments, consumption, and current accounts. During the investigation, the latest studies on international capital flows were reviewed and systemised, 11 CEE countries’ main indicators from across a 10-years period were collected, and computed coefficients, which represent the change associated with a variation in clusters’ capital inflows, equal to 1 percent change of GDP, were analysed. The analyses conducted show that capital flows have an impact on countries’ economies. The main findings are:  first, domestic savings and consumption are seen to have been more strongly associated with capital inflows than investments in developed countries. Second, the relationship between investments, domestic savings, consumption and one inflow in portfolio flows would be negative, in both highly developed countries and emerging market countries. Third, where positive inflows in net and gross capital are concerned, foreign direct investments would have an insignificant positive impact on current accounts in highly developed countries and developed countries but a negative impact in emerging market countries. By achieving economic growth dynamics within a specific country, a wide evaluation of a country’s capital flows can be performed, and control of capital flows gained, by applying different assessment models.

Harinder S. Kohli (ed.). Growth and Development in Emerging Market Economies: International Private Capital Flows, Financial Markets and Globalisation. New Delhi: Sage Publication 2008. 369 pages. Hardbound. Indian Rs 695.00.

2008 ◽  
Vol 47 (3) ◽  
pp. 304-305
Author(s):  
Henna Ahsan
Keyword(s):  
Capital Flows ◽  
Growth And Development ◽  
Global Economy ◽  
Emerging Market ◽  
Balance Sheet ◽  
Emerging Market Economies ◽  
New Delhi ◽  
Infrastructure Development ◽  
Market Economies ◽  
Emerging Market Countries

The book discusses the different experiences in Asia and Latin America, while covering the closely related areas under the purview of Emerging Market Economies (EMEs). The first chapter, “Introduction and Overview” has written by Harinder S. Kohli gives an excellent review of the existing literature on the subject. The book discusses six related topics which include nine papers presented at the Emerging Markets Forum Meeting held in Jakarta, Indonesia, in September 2006. The book highlights the main factors of growth and development in Emerging Market Economies (EMEs) now closely related with international capital flows, development of financial market, the countries’ ability to integrate successfully with the global economy through trade and investment and their ability to forge public-private partnerships including infrastructure development. Chapter 2, of the book is an article titled “Global Imbalances, Oil Revenues and Capital Flows to Emerging Market Countries” by Jack Boorman explains the favourable global environment and its impact on capital flows to Emerging Market Countries (EMCs). The EMCs got advantage from this benign global economic environment, such as high economic growth rate, increase in exports, better national balance sheet and increase in foreign exchange reserves, but due to high oil prices the situation has been changed.

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