Currency Wars, Coordination, and Capital Controls
The strong monetary policy actions undertaken by advanced economies' central banks have led to complaints of “currency wars” by some emerging market economies, and to widespread demands for more macroeconomic policy coordination. This paper revisits these issues. It concludes that, while advanced economies' monetary policies indeed have had substantial spillover effects on emerging market economies, there was and still is little room for coordination. It then argues that restrictions on capital flows were and are a more natural instrument for advancing the objectives of both macro and financial stability.
Prepared for the Asian Monetary Policy Forum, Singapore, May 2016. Thanks to Vivek Arora, Tam Bayoumi, Ricardo Caballero, Steve Cecchetti, Bill Cline, Xavier Gabaix, Taka Ito, Olivier Jeanne, Sebnem Kalemli-Ozcan for discussions and comments, and to Julien Acalin for outstanding research assistance. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
Olivier Blanchard, 2017. "Currency Wars, Coordination, and Capital Controls," International Journal of Central Banking, International Journal of Central Banking, vol. 13(2), pages 283-308, June. citation courtesy of