Surging Capital Flows to Emerging Asia: Facts, Impacts, and Responses

30 Pages Posted: 9 Aug 2012

See all articles by Ravi Balakrishnan

Ravi Balakrishnan

International Monetary Fund (IMF) - Fiscal Affairs Department

Sylwia Barbara Nowak

International Monetary Fund (IMF)

Sanjaya Panth

affiliation not provided to SSRN

Yiqun Wu

International Monetary Fund (IMF)

Date Written: May 2012

Abstract

Net capital flows to emerging Asia rebounded at a record pace following the global financial crisis, raising concerns about overheating and financial stability. This paper documents the size and composition of the most recent surge to Asian emerging markets from a historical perspective and compares developments in the broader economy, asset prices, and corporate variables across the different episodes of strong inflows. We find little evidence of a significant build-up of imbalances and resource misallocation during the most recent surge. We also review country experiences in managing the risks associated with inflows and argue that Asian countries have used regulatory measures during past surges, although there is not strong evidence of their efficacy without supporting monetary and fiscal policies.

Keywords: Asia, Capital Inflows, Macroprudential Policy, Capital Flows, Emerging Markets, Risk Management, Stabilization Measures

JEL Classification: E58, F21, F32, G15, G28

Suggested Citation

Balakrishnan, Ravi and Nowak, Sylwia Barbara and Panth, Sanjaya and Wu, Yiqun, Surging Capital Flows to Emerging Asia: Facts, Impacts, and Responses (May 2012). IMF Working Paper No. 12/130, Available at SSRN: https://ssrn.com/abstract=2127024

Ravi Balakrishnan (Contact Author)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States
001 202 623 5674 (Phone)
001 202 623 6249 (Fax)

Sylwia Barbara Nowak

International Monetary Fund (IMF) ( email )

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

Sanjaya Panth

affiliation not provided to SSRN ( email )

Yiqun Wu

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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