One-Size-Fits-One: Tailor-Made Fiscal Responses to Capital Flows
29 Pages Posted: 18 Dec 2008
Date Written: December 2008
Abstract
This paper surveys policy responses in recent years to capital inflows in a diverse group of countries that are represented by the Netherlands at the IMF Executive Board. Based on the findings from cross-country empirical literature, the paper distills some guiding principles for policy responses to excessive capital inflows, depending on country-specific circumstances and with a particular focus on fiscal policy. In addition to considering the conventional macroeconomic and structural policy tools, the paper also discusses the role of microfiscal policies in affecting the size and the composition of capital inflows. While conditions in these countries have changed very recently, the policy principles remain salient.
Keywords: Fiscal policy, Capital flows, Capital inflows, Capital account, Capital account, Current account deficits
Suggested Citation: Suggested Citation
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