Effect of capital inflows (Furceri, Guichard and Rusticelli)

The effect of episodes of large capital inflows on domestic credit by Davide Furceri, Stéphanie Guichard and Elena Rusticelli, published by OECD. “This paper analyses the effect of capital inflow shocks on the evolution of domestic credit. The results of the paper also suggest that the short-term effect of capital inflow shocks on domestic credit depends on countries’ macroeconomic policy stances. In particular, it is found that this effect is lower in countries with higher real exchanges rate flexibility and fiscal policy counter-cyclicality.  http://www.oecd-ilibrary.org/content/workingpaper/5kgc9kpv8vg8-en