The Eurozone crisis has demonstrated that is not only emerging markets that can suffer from capital flow instability, but advanced economies as well, with the Eurozone countries being particularly vulnerable as they are trapped in the common currency area.
The literature on capital flows has moved on in recent years and researchers have started to focus increasingly on gross flows, which we will do as well. Furthermore, the distinction between different types of capital flows, FDI vs. more short-term portfolio investments, is an important one to make as well.
Not only will the project keep me quite busy, but also the ECB's ethical guidelines prevent me, or make it much harder for me, to blog on a bunch of topics, including current monetary policy, etc. For that reason, my blog will for the most part be put temporarily on halt during my stay here in Frankfurt.
Some interesting literature on the topic mentioned above:
- Calvo, Guillermo A. "Capital flows and capital-market crises: the simple economics of sudden stops." Journal of applied Economics 1, no. 1 (1998): 35-54.
- Obstfeld, Maurice. "Models of currency crises with self-fulfilling features." European economic review 40, no. 3-5 (1996): 1037-1047.
- Krugman, Paul. "Are currency crises self-fulfilling?." NBER Macroeconomics annual 11 (1996): 345-378.