Global financial cycle and liquidity management

• 成果类型: Article
• 署名作者: Jeanne, Olivier; Sandri, Damiano
• 署名单位: Johns Hopkins University; National Bureau of Economic Research; Bank for International Settlements (BIS)
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2023.103736
• 发表日期: 2023
• 关键词: capital flows; Foreign exchange reserves; Capital flow management; capital controls; sudden stops

摘要

We use a tractable model to show that emerging markets can protect themselves from the global financial cycle by expanding (rather than restricting) capital flows. This involves accumulating foreign liquid assets when global liquidity is high to then buy back domestic assets at a discount when global financial conditions tighten. Since the private sector does not internalize how this buffering mechanism reduces international borrowing costs, a social planner increases the size of capital flows relative to the laissez-faire equilibrium. The model also shows that foreign exchange interventions may be preferable to capital controls in less financially developed countries. (c) 2023 The Authors. Published by Elsevier B.V. This is an open access article under the CC BYNC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).