Managing Capital Flows and
Exchange Rates
Perspectives from the Pacific
Basic
Description
The essays in this volume
examine the theoretical and policy issues associated with international capital flows and
exchange rates for emerging markets in the Pacific Basin region. Emerging market countries
in both Asia and Latin America offer a wide variety of examples for the comparative study
of the implications of international capital flow surges and appropriate policy responses.
The essays address four broad issues. First, they investigate the determinants of
international capital flows, particularly the relative role of domestic and external
factors in driving capital flows. Second, they inquire how predictable and contagious
capital flow reversals and exchange rate crises are. Third, they explore what the domestic
economic effects of capital inflows on emerging economies have been, and finally seek to
suggest what are the appropriate responses by policymakers to capital inflow surges.
Chapter Contents
1. Managing capital flows and
exchange rates: overview Reuven Glick; Part I. Determinants of Capital Flows and Exchange
Rates: 2. US portfolio investment in Asian capital markets Henning Bohn and Linda L.
Tesar; 3. FDI, trade, and real exchange rate linkages in developing countries Linda S.
Goldberg and Michael Klein; 4. Capital inflows and the real exchange rate: analytical
framework and econometric evidence Pierre-Richard Agénor and Alexander Hoffmaister; 5.
Risk and financial development: a comparative case study of Mexico and Indonesia Theo S.
Eicher and Stephen J. Turnovsky; Part II. Exchange Rate Crisis and Contagion: 6. Exchange
rate instability: determinants and predictability Richard A. Meese and Andrew K. Rose; 7.
Derivative products in exchange rate crisis Peter Garber and Subir Lall; 8. Crisis,
contagion, and country funds: effects on East Asia and Latin America Jeffrey A. Frankel
and Sergio L. Schmukler; 9. Co-movements among emerging equity markets Holger Wolf; Part
III. Effects of Capital Inflows: 10. Net capital inflows: how much to accept, how much to
resist? Helmut Reisen; 11. The overborrowing syndrome: are East Asian economies different?
Ronald I. McKinnon and Huw Pill; 12. Capital inflows, financial intermediation, and
aggregate demand: empirical evidence from Mexico and other Pacific Basin countries Steven
Kamin and Paul Wood; Part IV. Policy Responses to Capital Inflows: 13. Speculative capital
inflows and exchange rates targeting in the Pacific Basin: theory and evidence Kenneth
Kletzer and Mark Spiegel; 14. Too much of a good thing: the macroeconomic effects of
taxing capital inflows Carmen M. Reinhart and R. Todd Smith; 15. Exchange rate policies
and capital account management: Chile in the 1990s Kevin Cowen and Jose De Gregorio.
520 pages