Capital Flows to Transition Economies: Master or Servant?

Czech Journal of Economics and Finance, No. 56, pp. 5-6, October 2002

IMF Working Paper No. WP/02/11

21 Pages Posted: 18 Jun 2009

See all articles by Leslie Lipschitz

Leslie Lipschitz

IMF Institute

Timothy Lane

International Monetary Fund (IMF) - Policy Development and Review Department

Alexandros Mourmouras

International Monetary Fund (IMF) - Policy Development and Review Department

Date Written: June 17, 2006

Abstract

This paper discusses the forces driving capital flows in the transition countries of Central and Eastern Europe (CEE). It argues that various influences – specifically, the real exchange rate history and trend and the factor intensity of production – can combine to motivate very large capital inflows. These inflows can either undermine attempts at monetary restraint or force excessive appreciations. They can also render the economy highly vulnerable to shifts in market sentiment. The policy implications of the analysis are awkward: exposure to global capital markets sets up difficult dilemmas for policy and leads to vulnerabilities that can be reduced but not eliminated.

Keywords: Capital flows, transition economies

JEL Classification: P20, D24

Suggested Citation

Lipschitz, Leslie and Lane, Timothy and Mourmouras, Alexandros, Capital Flows to Transition Economies: Master or Servant? (June 17, 2006). Czech Journal of Economics and Finance, No. 56, pp. 5-6, October 2002, IMF Working Paper No. WP/02/11, Available at SSRN: https://ssrn.com/abstract=1421466

Leslie Lipschitz (Contact Author)

IMF Institute ( email )

700 19th St. NW
Washington, DC 20431
United States
202-623-8866 (Phone)

Timothy Lane

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States
202-623-7648 (Phone)
202-623-4405 (Fax)

Alexandros Mourmouras

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Room 5-311
Washington, DC 20431
United States
202-623-5402 (Phone)
202-589-5402 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
91
Abstract Views
1,565
rank
136,301
PlumX Metrics