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Capital inflows and monetary policy in Asia before the financial crisis

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Title Capital inflows and monetary policy in Asia before the financial crisis
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Material Type Reports
Author(English)

Kwack, Sung Yeung

Publisher

[Seoul]:Korea Institute for International Economic Policy

Date 1999
Series Title; No KIEP Working Paper / 99-12
ISBN 89-322-4055-8
Pages 66
Subject Country Indonesia(Asia and Pacific)
Malaysia(Asia and Pacific)
Philippines(Asia and Pacific)
Singapore(Asia and Pacific)
South Korea(Asia and Pacific)
Thailand(Asia and Pacific)
Taiwan(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Macroeconomics
Holding KIEP; KDI School

Abstract

Asia has received sizable capital inflows before the Asian crisis in 1997. Capital inflows are contributed in part by internal factors such as high economic growth, liberalizing the financial system and opening the capital market, and in part by external factors such as low rates of interest in industrial countries, especially the United States. Capital inflows supplied finance needed for a high rate of investment, imports and economic growth. At the same time, capital inflows distorted relative good prices, fed bubbles into real asset markets and inflationary pressure into the economy. Substantial capital inflows can give rise to microeconomic and macroeconomic policy issues. Especially, capital inflow surges increase the difficulty in managing monetary policy of an open economy under a fixed exchange rate system and with unrestricted trade flows and capital flows. (The rest omitted)