Achieving Economic Sustainability in CESEE Countries
Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 5: Managing stop–go capital flows in Asian emerging markets: lessons for the CESEE economies
It is a distinct pleasure to be able to share my views on managing stop–go capital flows. There is no doubt that destabilizing capital flows continue to be an important policy challenge facing all central banks in emerging market economies. This has never been more true than today when economic and financial globalization continues apace. And, while each Central, Eastern and South-Eastern European (CESEE) economy has its own special circumstances that call for tailored policy responses, there are nonetheless broad lessons to be learned from the experiences of others. In this sense, the lessons from emerging Asia in their putative ability to successfully manage the stop–go capital flow risks are instructive. My thesis today is that recent experiences in Asian emerging markets point to good policy choices but also to good luck in dealing with capital flows. Good policies have helped, so far, to improve the resilience of economies to the potentially destabilizing forces associated with cross-border capital flows; concerns about the longer-run side-effects of these policies still remain. But I want also to argue that good luck has played a role, too.
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