Do managed exchange rates and monetary sterilization encourage capital inflows?
Economies with exchange rate pegs generally attract higher capital inflows either through lower transaction costs of trade and finance, or by encouraging investors to exploit any interest differentials, or where foreign exchange (FX) interventions are sterilized, any previous interest differentials...
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Public Library of Science (PLoS)
2020-01-01
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| Series: | PLoS ONE |
| Online Access: | https://doi.org/10.1371/journal.pone.0238205 |
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doaj-ea6d6997ef264036b0b24ecafbe1924b2021-03-03T22:02:45ZengPublic Library of Science (PLoS)PLoS ONE1932-62032020-01-01158e023820510.1371/journal.pone.0238205Do managed exchange rates and monetary sterilization encourage capital inflows?Vandana AryaTony CavoliIlke OnurEconomies with exchange rate pegs generally attract higher capital inflows either through lower transaction costs of trade and finance, or by encouraging investors to exploit any interest differentials, or where foreign exchange (FX) interventions are sterilized, any previous interest differentials are preserved. This paper examines these relationships using FDI, portfolio and bank inflows for 28 emerging market economies. We find that greater fixity of the exchange rate and sterilized intervention can potentially encourage capital inflows, and that the effect is magnified when combined. Further, we find that the effect differs by region, and it is larger for higher inflows.https://doi.org/10.1371/journal.pone.0238205 |
| collection |
DOAJ |
| language |
English |
| format |
Article |
| sources |
DOAJ |
| author |
Vandana Arya Tony Cavoli Ilke Onur |
| spellingShingle |
Vandana Arya Tony Cavoli Ilke Onur Do managed exchange rates and monetary sterilization encourage capital inflows? PLoS ONE |
| author_facet |
Vandana Arya Tony Cavoli Ilke Onur |
| author_sort |
Vandana Arya |
| title |
Do managed exchange rates and monetary sterilization encourage capital inflows? |
| title_short |
Do managed exchange rates and monetary sterilization encourage capital inflows? |
| title_full |
Do managed exchange rates and monetary sterilization encourage capital inflows? |
| title_fullStr |
Do managed exchange rates and monetary sterilization encourage capital inflows? |
| title_full_unstemmed |
Do managed exchange rates and monetary sterilization encourage capital inflows? |
| title_sort |
do managed exchange rates and monetary sterilization encourage capital inflows? |
| publisher |
Public Library of Science (PLoS) |
| series |
PLoS ONE |
| issn |
1932-6203 |
| publishDate |
2020-01-01 |
| description |
Economies with exchange rate pegs generally attract higher capital inflows either through lower transaction costs of trade and finance, or by encouraging investors to exploit any interest differentials, or where foreign exchange (FX) interventions are sterilized, any previous interest differentials are preserved. This paper examines these relationships using FDI, portfolio and bank inflows for 28 emerging market economies. We find that greater fixity of the exchange rate and sterilized intervention can potentially encourage capital inflows, and that the effect is magnified when combined. Further, we find that the effect differs by region, and it is larger for higher inflows. |
| url |
https://doi.org/10.1371/journal.pone.0238205 |
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