One-Size-Fits-One: Tailor-Made Fiscal Responses to Capital Flows

29 Pages Posted: 18 Dec 2008

See all articles by Daria Zakharova

Daria Zakharova

International Monetary Fund (IMF)

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

Zakharova, Daria, One-Size-Fits-One: Tailor-Made Fiscal Responses to Capital Flows (December 2008). IMF Working Paper No. 08/269, Available at SSRN: https://ssrn.com/abstract=1316737

Daria Zakharova (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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