Central Bank of Chile paper tests evidence of asset price booms
A working paper, published by the Central Bank of Chile in August, tests whether capital flows drive asset price booms, and having established a link, suggests measures that authorities can take to reduce the impact of flows.
The author, Eduardo Olaberría, analyses data from 20 developed and 20 emerging economies over the period 1990–2010. "The estimations show that capital inflows are strongly associated with booms in asset prices, even when controlling for other factors," the paper says.
The
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