On Capital Inflows and Outflows: Gross and Net Flows and Economic Policy

Capital flows are relevant due to its importance to financial stability, macroeconomic fluctuations and exchange rates. There are many dimensions in the discussion on capital flows, being the most important the distinction between gross capital inflow and net capital inflow, distinction that has consequences on the macroeconomic management and the financial stability. Then, this article, in order to deepen in the analysis of capital inflow's transmission mechanism, analyzes and discusses those concepts, taking into account the distortions and the underlying effects originated when different policy instruments are employed. (Audio: Department of Economic Publications)