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Managing Capital Flows: Theoretical Advances and IMF Policy Frameworks

  • Anton Korinek ORCID logo EMAIL logo

Abstract

We analyze recent theoretical advances in the area of capital flow management and compare them with the IMF’s policy frameworks in the area, as laid out in the IMF’s Institutional View and related documents. Although the Institutional View represented an important leap forward, we discuss several tensions with the academic literature. We also emphasize the important role that the IMF guidance could play in building a better set of policy instruments to deal with volatile capital flows. More broadly, individual countries need sufficient policy space to pursue their individual welfare objectives. Finally, we propose how to strengthen the IMF’s analytical framework for international spillovers.


Corresponding author: Anton Korinek, Department of Economics and Darden School of Business, University of Virginia, Charlottesville, VA, USA; and David M. Rubenstein Fellow, The Brookings Institution, Washington, DC, USA, E-mail:

This paper is a revised version of a background paper (Korinek, 2020) that the author contributed to the evaluation “IMF Advice on Capital Flows” by the Independent Evaluation Office (IEO) of the International Monetary Fund (IMF). The views expressed in this paper are those of the author and do not necessarily represent those of the IEO, the IMF, its Executive Board, or IMF management.


Funding source: Independent Evaluation Office of the IMF

Acknowledgements

The author thanks Charles Collyns, Gita Gopinath, Olivier Jeanne, Sebnem Kalemli-Özcan, Prakash Loungani, Alessandro Rebucci and Joseph Stiglitz for thoughtful comments and conversations on the topic.

  1. Research funding: Financial support from the IEO is gratefully acknowledged.

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Received: 2021-04-18
Accepted: 2022-02-09
Published Online: 2022-09-15

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