TY  - BOOK
AU  - Magud,Nicolas E.
AU  - Vesperoni,Esteban
TI  - Exchange Rate Flexibility and Credit during Capital Inflow Reversals: Purgatory...not Paradise 
T2  - IMF Working Papers; Working Paper
SN  - 1475543735 :
SN  - 1018-5941
PY  - 2014///
CY  - Washington, D.C.
PB  - International Monetary Fund
KW  - Exchange Rate Flexibility
KW  - imf
KW  - Exchange Rate Regime
KW  - Exchange Rate Regimes
KW  - Exchange Rate
KW  - Flexible Exchange Rate
KW  - Macro-Prudential
KW  - Antigua and Barbuda
KW  - Bulgaria
KW  - Central African Republic
KW  - Congo, Democratic Republic of the
KW  - Dominican Republic
N2  - We document the behavior of macro and credit variables during episodes of capital inflows reversals in economies with different degrees of exchange rate flexibility. We find that exchange rate flexibility is associated with milder credit growth during the boom but, even though smaller than in more rigid regimes, it cannot shield the economy from a credit reversal. Furthermore, we observe what we dub as a recovery puzzle: credit growth in economies with more flexible exchange rate regimes remains tepid well after the capital flow reversal takes place. This results stress the complementarity of macro-prudential policies with the exchange rate regime. More flexible regimes could help smoothing the credit cycle through capital surchages and dynamic provisioning that build buffers to counteract the credit recovery puzzle. In contrast, more rigid exchange rate regimes would benefit the most from measures to contain excessive credit growth during booms, such as reserve requirements, loan-to-income ratios, and debt-to-income and debt-service-to-income limits
UR  - http://elibrary.imf.org/view/IMF001/21267-9781475543735/21267-9781475543735/21267-9781475543735.xml
UR  - http://www.imfbookstore.org/IMFORG/9781475543735
ER  -