MissMahvash Qureshi's Books

What’s In a Name? That Which We Call Capital Controls

By: Mr.Atish R. Ghosh,MissMahvash Qureshi

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What’s In a Name? That Which We Call Capital Controls

By: Mr.Atish R. Ghosh,MissMahvash Qureshi

This paper investigates why controls on capital inflows have a bad name, and evoke such visceral opposition, by tracing how capital controls have been used and perceived, since the late nineteenth century. While advanced countries often employed capital controls to tame speculative inflows during the last century, we conjecture that several factors undermined their subsequent use as prudential tools. First, it appears that inflow controls became inextricably linked with outflow controls. The latter have typically been more pervasive, more stringent, and more linked to autocratic regimes, failed macroeconomic policies, and financial crisis—inflow controls are thus damned by this “guilt by association.” Second, capital account restrictions often tend to be associated with current account restrictions. As countries aspired to achieve greater trade integration, capital controls came to be viewed as incompatible with free trade. Third, as policy activism of the 1970s gave way to the free market ideology of the 1980s and 1990s, the use of capital controls, even on inflows and for prudential purposes, fell into disrepute.

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International Monetary Fund

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ISBN 10

1498332838

ISBN 13

9781498332835

Exchange Rate Management and Crisis Susceptibility

A Reassessment

By: Mr.Atish R. Ghosh,Mr.Jonathan David Ostry,MissMahvash Qureshi

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Exchange Rate Management and Crisis Susceptibility

A Reassessment

By: Mr.Atish R. Ghosh,Mr.Jonathan David Ostry,MissMahvash Qureshi

This paper revisits the bipolar prescription for exchange rate regime choice and asks two questions: are the poles of hard pegs and pure floats still safer than the middle? And where to draw the line between safe floats and risky intermediate regimes? Our findings, based on a sample of 50 EMEs over 1980-2011, show that macroeconomic and financial vulnerabilities are significantly greater under less flexible intermediate regimes—including hard pegs—as compared to floats. While not especially susceptible to banking or currency crises, hard pegs are significantly more prone to growth collapses, suggesting that the security of the hard end of the prescription is largely illusory. Intermediate regimes as a class are the most susceptible to crises, but “managed floats”—a subclass within such regimes—behave much more like pure floats, with significantly lower risks and fewer crises. “Managed floating,” however, is a nebulous concept; a characterization of more crisis prone regimes suggests no simple dividing line between safe floats and risky intermediate regimes.

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International Monetary Fund

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ISBN 10

1484383974

ISBN 13

9781484383971

Regulating Capital Flows at Both Ends

Does it Work?

By: Mr.Atish R. Ghosh,MissMahvash Qureshi,Naotaka Sugawara

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Regulating Capital Flows at Both Ends

Does it Work?

By: Mr.Atish R. Ghosh,MissMahvash Qureshi,Naotaka Sugawara

This paper examines whether cross-border capital flows can be regulated by imposing capital account restrictions (CARs) in both source and recipient countries, as was originally advocated by John Maynard Keynes and Harry Dexter White. To this end, we use data on bilateral cross-border bank flows from 31 source to 76 recipient (advanced and emerging market) countries over 1995–2012, and combine this information with a new and comprehensive dataset on various outflow and inflow related capital controls and prudential measures in these countries. Our findings suggest that CARs at either end can significantly influence the volume of cross-border bank flows, with restrictions at both ends associated with a larger reduction in flows. We also find evidence of cross-border spillovers whereby inflow restrictions imposed by countries are associated with larger flows to other countries. These findings suggest a useful scope for policy coordination between source and recipient countries, as well as among recipient countries, to better manage potentially disruptive flows.

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International Monetary Fund

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ISBN 10

1484357876

ISBN 13

9781484357873

The Empirics of Exchange Rate Regimes and Trade

Words vs. Deeds

By: Mr.Charalambos G. Tsangarides,MissMahvash Qureshi

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The Empirics of Exchange Rate Regimes and Trade

Words vs. Deeds

By: Mr.Charalambos G. Tsangarides,MissMahvash Qureshi

This paper examines the impact of exchange rate regimes on bilateral trade while differentiating the effects of "words" and "deeds". Our findings-based on an extended database for de jure and de facto exchange rate classifications-show that while fixed exchange rate regimes increase trade, there is no systematic difference in the effects of policy announcements versus actions to maintain exchange rate stability. The trade generating effect of more stable exchange rate regimes is however more pronounced when words and actions are aligned, both in the short and long-run. Policy credibility therefore plays an important role in determining the effects of de jure and de facto exchange rate arrangements such that deviations between the two could be costly. In addition, we find evidence that (i) the impact of hard pegs such as currency unions is broadly similar to that of conventional pegs; (ii) the currency union and direct peg effects evolve over time; and (iii) the effects of more stable regimes are heterogeneous across country groups.

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International Monetary Fund

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ISBN 10

145196319X

ISBN 13

9781451963199

Trade and Thy Neighbor’s War

By: MissMahvash Qureshi

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Trade and Thy Neighbor’s War

By: MissMahvash Qureshi

This paper examines the spatial dispersion effects of regional conflicts, defined as internal or external armed conflicts in contiguous states, on international trade. Our empirical findings-based on different measures of conflict constructed using alternate definitions of contiguity and conflict-reveal a significant collateral damage in terms of foregone trade as a result of spillovers from conflict in neighboring countries. The magnitude of this negative externality is somewhat larger for international conflicts than intrastate warfare, but about one-third of conflict in the host economies. Further, the impact is persistent-on average, it takes bilateral trade three years to recover from the end of intrastate conflicts in neighboring states, and five years from international conflicts. These findings are robust to alternate definitions of conflict, estimation methods, and specifications, and underscore the importance of taking into account spillover effects when estimating the economic costs of warfare.

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International Monetary Fund

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ISBN 10

1451874286

ISBN 13

9781451874280

Friedman Redux

External Adjustment and Exchange Rate Flexibility

By: Mr.Atish R. Ghosh,MissMahvash Qureshi,Mr.Charalambos G. Tsangarides

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Friedman Redux

External Adjustment and Exchange Rate Flexibility

By: Mr.Atish R. Ghosh,MissMahvash Qureshi,Mr.Charalambos G. Tsangarides

Milton Friedman argued that flexible exchange rates would facilitate external adjustment. Recent studies find surprisingly little robust evidence that they do. We argue that this is because they use composite (or aggregate) exchange rate regime classifications, which often mask very heterogeneous bilateral relationships between countries. Constructing a novel dataset of bilateral exchange rate regimes that differentiates by the degree of exchange rate flexibility, as well as by direct and indirect exchange rate relationships, for 181 countries over 1980–2011, we find a significant and empirically robust relationship between exchange rate flexibility and the speed of external adjustment. Our results are supported by several “natural experiments” of exogenous changes in bilateral exchange rate regimes.

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International Monetary Fund

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ISBN 10

1484331451

ISBN 13

9781484331453

Surges

By: Mr.Atish R. Ghosh,Mr.Jun Il Kim,MissMahvash Qureshi,Mr.Juan Zalduendo

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Surges

By: Mr.Atish R. Ghosh,Mr.Jun Il Kim,MissMahvash Qureshi,Mr.Juan Zalduendo

This paper examines why surges in capital flows to emerging market economies (EMEs) occur, and what determines the allocation of capital across countries during such surge episodes. We use two different methodologies to identify surges in EMEs over 1980-2009, differentiating between those mainly caused by changes in the country's external liabilities (reflecting the investment decisions of foreigners), and those caused by changes in its assets (reflecting the decisions of residents). Global factors-including US interest rates and risk aversion¡-are key to determining whether a surge will occur, but domestic factors such as the country's external financing needs (as implied by an intertemporal optimizing model of the current account) and structural characteristics also matter, which explains why not all EMEs experience surges. Conditional on a surge occurring, moreover, the magnitude of the capital inflow depends largely on domestic factors including the country's external financing needs, and the exchange rate regime. Finally, while similar factors explain asset- and liability-driven surges, the latter are more sensitive to global factors and contagion.

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International Monetary Fund

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ISBN 10

1463931840

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9781463931841

Managing Capital Inflows

What Tools to Use?

By: Mr.Jonathan David Ostry,Mr.Atish R. Ghosh,Mr.Karl Friedrich Habermeier,Mr.Luc Laeven,Mr.Marcos Chamon,MissMahvash Qureshi,Annamaria Kokenyne

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Managing Capital Inflows

What Tools to Use?

By: Mr.Jonathan David Ostry,Mr.Atish R. Ghosh,Mr.Karl Friedrich Habermeier,Mr.Luc Laeven,Mr.Marcos Chamon,MissMahvash Qureshi,Annamaria Kokenyne

Staff Discussion Notes showcase the latest policy-related analysis and research being developed by individual IMF staff and are published to elicit comment and to further debate. These papers are generally brief and written in nontechnical language, and so are aimed at a broad audience interested in economic policy issues. This Web-only series replaced Staff Position Notes in January 2011.

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ISBN 10

1463926545

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9781463926540

Managing the Tide

How Do Emerging Markets Respond to Capital Flows?

By: Mr.Atish R. Ghosh,Mr.Jonathan David Ostry,MissMahvash S Qureshi

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Managing the Tide

How Do Emerging Markets Respond to Capital Flows?

By: Mr.Atish R. Ghosh,Mr.Jonathan David Ostry,MissMahvash S Qureshi

This paper examines whether—and how—emerging market economies (EMEs) respond to capital flows to mitigate their untoward consequences. Based on a sample of about 50 EMEs over 2005Q1–2013Q4, we find that EME policy makers respond proactively to capital inflows by using a combination of policy tools: central banks raise the policy interest rate to address economic overheating concerns; intervene in the foreign exchange market to resist currency appreciation pressures; tighten macroprudential measures to dampen credit growth; and deploy capital inflow controls in the face of competitiveness and financial-stability concerns. Contrary to conventional policy advice to EMEs, we find no evidence of counter-cyclical fiscal policy in the face of capital inflows. Overall, policies are more likely to respond, and used in combination, during inflow surges than in more normal times.

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ISBN 10

1475589220

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9781475589221

A Tie That Binds

Revisiting the Trilemma in Emerging Market Economies

By: Mr.Maurice Obstfeld,Mr.Jonathan David Ostry,MissMahvash S Qureshi

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A Tie That Binds

Revisiting the Trilemma in Emerging Market Economies

By: Mr.Maurice Obstfeld,Mr.Jonathan David Ostry,MissMahvash S Qureshi

This paper examines the claim that exchange rate regimes are of little salience in the transmission of global financial conditions to domestic financial and macroeconomic conditions by focusing on a sample of about 40 emerging market countries over 1986–2013. Our findings show that exchange rate regimes do matter. Countries with fixed exchange rate regimes are more likely to experience financial vulnerabilities—faster domestic credit and house price growth, and increases in bank leverage—than those with relatively flexible regimes. The transmission of global financial shocks is likewise magnified under fixed exchange rate regimes relative to more flexible (though not necessarily fully flexible) regimes. We attribute this to both reduced monetary policy autonomy and a greater sensitivity of capital flows to changes in global conditions under fixed rate regimes.

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