Capital Flows at Risk: Taming the Ebbs and Flows

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Capital Flows at Risk: Taming the Ebbs and Flows is written by Mr.R. G Gelos and published by International Monetary Fund. It's available with International Standard Book Number or ISBN identification 1513522906 (ISBN 10) and 9781513522906 (ISBN 13).

The volatility of capital flows to emerging markets continues to pose challenges to policymakers. In this paper, we propose a new framework to answer critical policy questions: What policies and policy frameworks are most effective in dampening sharp capital flow movements in response to global shocks? What are the near- versus medium-term trade-offs of different policies? We tackle these questions using a quantile regression framework to predict the entire future probability distribution of capital flows to emerging markets, based on current domestic structural characteristics, policies, and global financial conditions. This new approach allows policymakers to quantify capital flows risks and evaluate policy tools to mitigate them, thus building the foundation of a risk management framework for capital flows.