Carry-trade inflows open to vicious circles, say Shin, Plantin
A Centre for Economic Policy Research paper published on Monday examines the effect low interest rate policies in advanced countries is having on capital inflows in emerging economies in the aftermath of the financial crisis.
Guillaume Plantin and Hyun Song Shin, the paper's authors, examine situations where carry trades are liable to trigger destabilising speculation in foreign exchange markets and the role monetary policy plays in the speculation.
Plantin and Shin show that in certain
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