Stagflation and Topsy-Turvy Capital Flows / Julien Bengui, Louphou Coulibaly.

Format:

Book

Author/Creator:

Bengui, Julien.

Contributor:

National Bureau of Economic Research.

Coulibaly, Louphou.

Series:

Working Paper Series (National Bureau of Economic Research) no. w30652.

NBER working paper series no. w30652

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2022.

Summary:

Are unregulated capital flows excessive during a stagflation episode? We argue that they likely are, owing to a macroeconomic externality operating through the economy's supply side. Inflows raise domestic wages through a wealth effect on labor supply and cause unwelcome upward pressure on marginal costs in countries where monetary policy is trying to drive down costs to stabilize inflation. Yet, market forces are likely to generate such inflows. Optimal capital flow management instead requires net outflows, suggesting topsy-turvy capital flows following markup shocks.

Notes:

Print version record

November 2022.