Should Developed Economies Manage International Capital Flows? An Empirical and Welfare Analysis
Bibliographic Data
| ID | 21512993 |
|---|---|
| Authors | Dennis Bonam (0000-0002-4320-0219, Economic Policy and Research Department De Nederlandsche Bank Spaklerweg 4 Amsterdam The Netherlands), Gavin Goy (0000-0003-3525-7976, Economic Policy and Research Department De Nederlandsche Bank Spaklerweg 4 Amsterdam The Netherlands, corresponding author), Emmanuel de Veirman (Economic Policy and Research Department De Nederlandsche Bank Spaklerweg 4 Amsterdam The Netherlands) |
| Year | 2024 |
| Volume | 86 |
| Issue | 6 |
| Pages | 1511-1538 |
| Publication date | 2024-12-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Oxford Bulletin of Economics and Statistics (JOURNAL) |
| Journal identifiers | ISSN: 0305-9049 • E-ISSN: 1468-0084 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/obes.12628 |
| OpenAlex | W4399549161 |
| Language | EN |
| References cited | 44 |
The literature on the effects of country risk premium shocks has largely focused on emerging market economies. We empirically show that in developed economies, risk premium shocks explain a non‐trivial share of aggregate fluctuations and are key drivers of real activity during crises. Our empirical results and results from a two‐country New Keynesian model indicate that an increase in the risk premium leads to a reduction in aggregate output under monetary union, but not so in countries with flexible exchange rates and independent monetary policy. Model simulations suggest that managing international capital flows enhances welfare in countries under monetary union
Capital flows · Country risk · Economics · Emerging markets · Macroeconomics · Market economy · Microeconomics · Monetary economics · Monetary policy · New Keynesian economics · Risk premium · Welfare · Economic Policies and Impacts · Global Financial Crisis and Policies · Monetary Policy and Economic Impact
| Highly cited | No |
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