The pre-crisis capital flow surge to emerging Europe : did countercyclical fiscal policy make a difference? /

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Bibliographic Details
Author / Creator:Atoyan, Ruben (Ruben V.)
Imprint:[Washington, D.C.] : International Monetary Fund, ©2012.
Description:1 online resource (34 pages).
Language:English
Series:IMF working paper, 2227-8885 ; WP/12/222
IMF working paper ; WP/12/222.
Subject:
Format: E-Resource Book
URL for this record:http://pi.lib.uchicago.edu/1001/cat/bib/13510997
Hidden Bibliographic Details
Other authors / contributors:Jaeger, Albert.
Smith, Dustin.
International Monetary Fund. European Department.
ISBN:1475584555
9781475584554
ISSN:2227-8885
Notes:Title from PDF title page (IMF Web site, viewed Sept. 12, 2012).
"European Department."
"September 2012."
Includes bibliographical references.
Summary:A push-pull-brake model of capital flows is used to study the effects of fiscal policy changes on private capital flows to emerging Europe during 2000-07. In the model, countercyclical fiscal policy has two opposing effects on capital inflows: (i) a conventional absorption reducing effect, as a tighter fiscal stance acts as a brake on capital flows; and (ii) an unconventional absorption-boosting effect, as a tighter fiscal stance increases investor confidence in the country. The empirical results suggest that push factors (low returns in flow-originating countries), rather than pull factors (high returns in flow-destination countries), drove most of the private capital flows to emerging Europe. And active countercyclical fiscal policy once the fiscal stance is adjusted for the automatic effects on the fiscal position of both internal and external imbalances acted as a brake on capital inflows. However, the empirical results also suggest that, even abstracting from political feasibility and fiscal policy lag considerations, countercyclical fiscal policy alone is unlikely to be an effective policy tool to put an effective brake on sudden capital flow surges.
Other form:Print version: 9781475584554
Standard no.:10.5089/9781475584554.001