Emerging and developing economies and capital flow management measures
Evidences and challenges
DOI:
https://doi.org/10.69585/2595-6892.2025.1211Keywords:
capital flow management measures, emerging and developing economies, currency hierarchy, external vulnerabilityAbstract
In the international monetary and financial system, with high capital mobility and a rigid currency hierarchy, emerging and developing economies (EDEs) are more vulnerable to capital flow instabilities, making the use of capital flow management measures (CFMs) necessary. The aim of this paper is to discuss such instruments based on the most recent theoretical and empirical contributions. The literature shows that CFMs can reduce external vulnerabilities and should therefore be incorporated into the economic policies of EDEs. However, the best design depends on the objectives and the characteristics of each economy. Furthermore, there are considerable obstacles to the adoption of such instruments as illustrated by the Brazilian case.
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