Coping with capital inflows 2400-PP3SL224
A. Methodology of writing a thesis. Formulation and verification of a research hypothesis.
B. Discussion of research areas providing a basis for the selection of the thesis topics:
1. Principal component analysis: calculating principal components, their use in the analysis of stock market indices and internal vs. external determinants of capital flows.
2. Cluster analysis: basic concepts and algorithms, K-means clustering technique.
3. The bilateral capital flows databases: IMF Coordinated Portfolio Investment Survey and Coordinated Direct Investment Survey.
4. The evolution of capital flows to emerging countries: volatility, magnitude and composition.
5. Internal vs. external factors driving capital flows.
6. Challenges associated with capital flows: excessive external borrowing, asset bubbles, overheating, exchange rate appreciation., sudden stops and reversals.
7. Policy responses to capital flows: restrictions on the magnitude, capital controls and exchange rate management, monetary policy and reserves accumulation.
Type of course
Learning outcomes
Upon the completion of the seminar, the student
Knowledge:
Understands the determinants of capital flows to emerging countries.
Knows the consequences of sudden stops and capital reversals.
Skills:
Is able to use the principal component method.
Is able to use the K-means clustering technique.
Interprets the policy responses to capital flows.
Is able to use and analyze data collected in Coordinated Portfolio Investment Survey and Coordinated Direct Investment Survey.
Social skills:
is able to meet time-constrained targets through effective planning and organization.
is able to combine information from different sources to deepen the knowledge of the factors behind capital movements and their consequences.
KW01, KW02, KW03, KU01, KU02, KW03, KK01, KK02, KK03
Assessment criteria
The progress in the preparation of the thesis is the sole assessment criterion. During the fall semester students, assisted by the supervisor, select the topic of the thesis, prepare a detailed plan of the thesis and a preliminary version of the thesis. During the spring semester students conduct their own research project and complete the thesis.
To pass the second semester, students have to submit the complete theses.
Bibliography
Bayoumi, T and F Ohnsorge (2013), Do Inflows or Outflows Dominate? Global Implications of Capital Account Liberalization in China, IMF Working Paper WP/13/89.
Cardarelli, R., Elekdag, S. and Kose, M.A., 2009, Capital Inflows: Macroeconomic Implications and Policy Responses, IMF Working Paper No. 09/40.
Forbes, Kristin J., and Francis E. Warnock, 2012, “Capital Flow Waves: Surges, Stops, Flight, and Retrenchment,” Journal of International Economics, Vol. 88, No. 2, pp. 235–51
IMF (2013), The Yin and Yang of capital flow management: balancing capital inflows with capital outflows, World Economic Outlook, October, chapter 4.
Levchenko, A., and Mauro, P. (2006), Do Some Forms of Financial Flows Help Protect from Sudden Stops? IMF Working Paper No. 06/202.
Montiel, P.J. (2014), Capital Flows: Issues and Policies, Open Economy Review25, p. 595-633
Ostry, J., Ghosh, A., Chamon, M., and Qureshi, M. (2012), “Tools for Managing Financial-Stability Risks from Capital Inflows”, Journal of International Economics, 88: 407–421.
Additional information
Additional information (registration calendar, class conductors, localization and schedules of classes), might be available in the USOSweb system: