English (United Kingdom)

https://curated-unify.zendy.io/wp-json/zendy-region/v1/featured_content/oa?rat=en

https://curated-unify.zendy.io/wp-json/zendy-region/v1/highlighted_journal/

Global: Zendy Plus annual

Presents the access of premium content as premium feature

Premium Content

Presents the keyphrase highlighting as premium feature

Keyphrase Highlighting

Presents the summarisation as premium feature

Summarisation

Insights

Presents the pdf analysis as premium feature

PDF Analysis

Presents the zaia usage as premium feature

ZAIA

Global: Zendy Tools annual

Global: Zendy Free Plan

Global: Zendy Tools monthly

Global: Zendy Plus monthly

The financial crisis has again brought home the profound financial linkages across countries, often manifest in highly volatile capital flows. This volatility has prompted interest in multilateral principles to guide policies in both source and recipient countries. This paper discusses the analytical underpinnings of such principles, and attempts to draw implications from the analytics for the desirability of multilateral coordination of country policies. We argue that the global welfare implications of capital account regulations, or policies that mimic their effects, are threefold. First, spillovers from such policies do not necessarily have normative implications: if policies are justified from a national standpoint (in terms of reducing domestic distortions), under a range of conditions they should be pursued even if they give rise to cross-border spillovers. Second, however, if policies in one country exacerbate existing distortions in other countries, and it is costly for other countries to respond, then multilateral coordination of unilateral policies is likely to be beneficial. Third, coordination may require borrowers to reduce inflow controls or, much thornier, agreement by lenders to partially internalize the risks from excessively large or risky outflows. *Corresponding author: jostry@imf.org 1 We thank Olivier Blanchard, Marcos Chamon, Raphael Espinoza, and David Lipton for helpful comments on earlier versions of this paper, and Jane Haizel for assistance. Views expressed are the authors’ and should not be attributed to the IMF.

Multilateral Aspects of Managing the Capital Account