US

Capital Outflows

Experience over the past 30 years shows that for the typical emerging market nation facing rapid capital outflows, spending foreign currency reserves to defend its currency is a better policy for its citizens than not doing so.

Responses weighted by each expert's confidence

Participant University Vote Confidence Bio/Vote History
Acemoglu
Daron Acemoglu
MIT
Disagree
7
Bio/Vote History
Alesina
Alberto Alesina
Harvard Did Not Answer Bio/Vote History
Altonji
Joseph Altonji
Yale
No Opinion
Bio/Vote History
Auerbach
Alan Auerbach
Berkeley
No Opinion
Bio/Vote History
Autor
David Autor
MIT
Uncertain
10
Bio/Vote History
Baicker
Katherine Baicker
University of Chicago
No Opinion
Bio/Vote History
Bertrand
Marianne Bertrand
Chicago
Uncertain
1
Bio/Vote History
Chetty
Raj Chetty
Harvard
No Opinion
Bio/Vote History
Chevalier
Judith Chevalier
Yale
Disagree
2
Bio/Vote History
Currie
Janet Currie
Princeton
Uncertain
1
Bio/Vote History
Cutler
David Cutler
Harvard
Uncertain
1
Bio/Vote History
Deaton
Angus Deaton
Princeton
Disagree
1
Bio/Vote History
Duffie
Darrell Duffie
Stanford
Strongly Disagree
9
Bio/Vote History
Better to allow to devaluation of the currency, promoting exports and not wasting valuable FX reserves, as defense is not likely to succeed.
Edlin
Aaron Edlin
Berkeley
No Opinion
Bio/Vote History
Eichengreen
Barry Eichengreen
Berkeley
Uncertain
10
Bio/Vote History
Whether intervention is wise depends on why capital is flowing out (bad policies or unfounded panic). In the first case it's hopeless.
Fair
Ray Fair
Yale
Disagree
5
Bio/Vote History
Goldberg
Pinelopi Goldberg
Yale Did Not Answer Bio/Vote History
Goolsbee
Austan Goolsbee
Chicago
Uncertain
1
Bio/Vote History
Greenstone
Michael Greenstone
University of Chicago
No Opinion
Bio/Vote History
Hall
Robert Hall
Stanford
Uncertain
2
Bio/Vote History
Really tough question. Outside.my expertise.
Holmström
Bengt Holmström
MIT
Uncertain
4
Bio/Vote History
Do not know broad evidence. Short time intervention could stem speculation. Long - term wasteful
Hoxby
Caroline Hoxby
Stanford
Disagree
5
Bio/Vote History
The right answer depends on the circumstances, especially whether permanent or temporary events account for outflows. Usually: disagree.
Judd
Kenneth Judd
Stanford
Disagree
6
Bio/Vote History
Efforts to maintain an overvalued currency will likely exhaust those reserves before they stop the outflows.
Kashyap
Anil Kashyap
Chicago Booth
Disagree
5
Bio/Vote History
Depends on the particulars, but it is usually better to fix the problem that is causing the reversal.
Klenow
Pete Klenow
Stanford
Disagree
2
Bio/Vote History
Reserve management has not prevented "Sudden Stops" from being a major source of emerging market business cycles.
-see background information here
Levin
Jonathan Levin
Stanford
Uncertain
1
Bio/Vote History
Maskin
Eric Maskin
Harvard
Agree
5
Bio/Vote History
Nordhaus
William Nordhaus
Yale
Strongly Agree
6
Bio/Vote History
Obstfeld
Maurice Obstfeld
Berkeley
Uncertain
10
Bio/Vote History
One should use reserves to defnd the financial system (notably banks with USD liabilities), not the "currency" (exchange rate) per se.
Saez
Emmanuel Saez
Berkeley
Disagree
3
Bio/Vote History
Scheinkman
José Scheinkman
Columbia University
Strongly Disagree
8
Bio/Vote History
Schmalensee
Richard Schmalensee
MIT
Disagree
3
Bio/Vote History
Shin
Hyun Song Shin
Princeton Did Not Answer Bio/Vote History
Stokey
Nancy Stokey
University of Chicago
No Opinion
Bio/Vote History
Thaler
Richard Thaler
Chicago Booth
No Opinion
Bio/Vote History
Udry
Christopher Udry
Northwestern
Uncertain
4
Bio/Vote History
Zingales
Luigi Zingales
Chicago Booth Did Not Answer Bio/Vote History