The Boom in Capital Flows to Developing Countries: Will It Go Bust Again?

Yılmaz AKYÜZ

Makale detayları

The Boom in Capital Flows to Developing Countries: Will It Go Bust Again?

Yazarlar:

Yılmaz AKYÜZ

Yayıncı:

Türkiye Ekonomi Kurumu Vakfı

Ana Başlıklar:

Ekonomi ve Maliye

Dergi:

Ekonomi-tek 2012 Vol.1 Issue 1, pp.63-96

Belge Tipi:

Makale

Yayın Tarihi:

1/2012

Belge Dili:

İngilizce

Document ID (Org No.):

2000404295

eISSN:

2791-7991

pISSN:

2146-6173

Özet:

 

This paper argues that the policy of quantitative easing and maintaining close-to-zero interest rates in advanced economies, notably the US, has been generating a surge in speculative capital flows to developing countries in search of yield and creating bubbles in foreign exchange, asset, credit and commodity markets. This latest generalized surge constitutes the fourth postwar boom in capital flows to developing countries. All previous ones ended with busts, causing serious damage to recipient countries. The conditions driving the recent boom in capital flows and commodity prices are not sustainable, and they are likely to be followed by a sharp downturn. Various scenarios that can bring them to an abrupt end are discussed. Examining the policy responses and financial and macroeconomic developments in major emerging economies, the paper concludes that deficit commodity-rich economies that have been enjoying the dual benefits of global liquidity expansion – that is, the boom in capital flows and commodity markets – are most vulnerable to a possible reversal and urges them to manage capital flows more effectively.

 

This paper argues that the policy of quantitative easing and maintaining close-to-zero interest rates in advanced economies, notably the US, has been generating a surge in speculative capital flows to developing countries in search of yield and creating bubbles in foreign exchange, asset, credit and commodity markets. This latest generalized surge constitutes the fourth postwar boom in capital flows to developing countries. All previous ones ended with busts, causing serious damage to recipient countries. The conditions driving the recent boom in capital flows and commodity prices are not sustainable, and they are likely to be followed by a sharp downturn. Various scenarios that can bring them to an abrupt end are discussed. Examining the policy responses and financial and macroeconomic developments in major emerging economies, the paper concludes that deficit commodity-rich economies that have been enjoying the dual benefits of global liquidity expansion – that is, the boom in capital flows and commodity markets – are most vulnerable to a possible reversal and urges them to manage capital flows more effectively.

Makale detayları

The Boom in Capital Flows to Developing Countries: Will It Go Bust Again?

Yazarlar: Yılmaz AKYÜZ

Yayıncı: Türkiye Ekonomi Kurumu Vakfı

Ana Başlıklar: Ekonomi ve Maliye

Dergi: Ekonomi-tek 2012 Vol.1 Issue 1, pp.63-96

Belge Tipi: Makale

Yayın Tarihi: 1/2012

Belge Dili: İngilizce

Document ID (Org No.): 2000404295

eISSN: 2791-7991

pISSN: 2146-6173

Sayı

Yazarlar:

Yılmaz AKYÜZ

Yayıncı:

Türkiye Ekonomi Kurumu Vakfı

Ana Başlıklar:

Ekonomi ve Maliye

Dergi:

Ekonomi-tek 2012 Vol.1 Issue 1, pp.63-96

Belge Tipi:

Makale

Yayın Tarihi:

1/2012

Belge Dili:

İngilizce

Document ID (Org No.):

2000404295

eISSN:

2791-7991

pISSN:

2146-6173