Institutional Affiliation: International Monetary Fund
|Managing Capital Inflows: The Role of Capital Controls and Prudential Policies|
with Jonathan D. Ostry, Atish R. Ghosh, Marcos Chamon: w17363
We examine whether macroprudential policies and capital controls can contribute to enhancing financial stability in the face of large capital inflows. We construct new indices of foreign currency (FX)-related prudential measures, domestic prudential measures, and financial-sector capital controls for 51 emerging market economies over the period 1995-2008. Our results indicate that both capital controls and FX-related prudential measures are associated with a lower proportion of FX lending in total domestic bank credit and a lower proportion of portfolio debt in total external liabilities. Other prudential policies appear to help restrain the intensity of aggregate credit booms. Experience from the global financial crisis suggests that prudential and capital control policies in place during...
|Managing Capital Inflows: The Role of Capital Controls and Prudential Policies |
with Jonathan D. Ostry, Atish R. Ghosh, Marcos Chamon
in Global Financial Crisis, Charles Engel, Kristin Forbes, and Jeffrey Frankel, organizers
|Fiscal Fatigue, Fiscal Space and Debt Sustainability in Advanced Economies|
with Atish R. Ghosh, Jun I. Kim, Enrique G. Mendoza, Jonathan D. Ostry: w16782
How high can public debt rise without compromising fiscal solvency? We answer this question using a stochastic ability-to-pay model of sovereign default in which risk-neutral investors lend to a government that displays "fiscal fatigue," because its ability to increase primary balances cannot keep pace with rising debt. As a result, the government faces an endogenous debt limit beyond which debt cannot be rolled-over. Using data for 23 advanced economies over 1970-2007, we find evidence of a fiscal reaction function with these features, and use it to compute "fiscal space," defined as the difference between projected debt ratios and debt limits.
Published: Atish R. Ghosh & Jun I. Kim & Enrique G. Mendoza & Jonathan D. Ostry & Mahvash S. Qureshi, 2013. "Fiscal Fatigue, Fiscal Space and Debt Sustainability in Advanced Economies," Economic Journal, Royal Economic Society, vol. 0, pages F4-F30, 02. citation courtesy of