The objective of this study is to analyze the countercyclical capital flow management (CFM) measures, and, to discuss the practices of some developing countries that have employed a variety of CFM measures since 1990s. According to the current literature CFM, basically, consists of three groups of tools: 1- Capital controls, 2- macro-prudential measures, 3- capital outflow liberalization. We elaborate all three groups of regulations in the study. Then, within this framework, we focus on Brazil, Chile and Colombia from Latin America, and, Thailand from East Asia in order to explain the experiences of developing countries regarding CFM. Our discussion on the country cases suggests that a developing country would be better off if it adopts a holistic approach, compared to depending on only one or two groups of CFM measures. This approach would both improve the effectiveness of the regulations, and, increase the flexibility of the management of capital flows. However, policymakers in developing countries need to note that there is no one-size-fits-all policy mix to effectively manage disruptive capital flows. Last but not the least developing countries need to consider CFM a useful complementary tool to the fiscal and monetary policies rather than a substitute to those.
Key words: Capital flow management, capital controls, macro-prudential measures, capital outflow liberalization. JEL Code: E44. Article Language: EnglishTurkish
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