Capital Flows, External Fragility and Currency Regimes:

Vol. 28 No. 2 (2008)

Apr-Jun / 2008
Published April 1, 2008
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Gabriel, Luciano Ferreira, and José Luís da Costa Oreiro. 2008. “Capital Flows, External Fragility and Currency Regimes:: A Theoretical Review”. Brazilian Journal of Political Economy 28 (2):331-57.

Capital Flows, External Fragility and Currency Regimes:

a theoretical review

Luciano Ferreira Gabriel
Mestre em Desenvolvimento Econômico pela Universidade Federal do Paraná (UFPR) e Pesquisador do Boletim Economia & Tecnologia do CEPEC-UFPR
José Luís da Costa Oreiro
Doutor em Economia pelo IE-UFRJ, Professor Adjunto do Departamento de Economia da Universidade Federal do Paraná (UFPR), Diretor do Centro de Pesquisas Econômicas (CEPEC-UFPR) e Pesquisador do CNPq
Brazilian Journal of Political Economy, Vol. 28 No. 2 (2008), Apr-Jun / 2008, Pages 331-357


The major integration and deregulation of the international financial markets increased the degree of interdependence and risk of incompatibility between the financial and monetary policy adopted by different countries. The consequences of these facts are the financial instability and the currency crisis. In this article we develop arguments advocating that independent of the currency regime adopted the national policy makers should take into account, between other factors, the major capital mobility and the integrations of markets. One of the corollaries of our analyses is that countries should pursue policies that reduces the degree of short-term capital volatile by the adoption of capital controls or though measures of prudential supervision.

JEL Classification: E44; F31; F32; F36.

Keywords: currency regime capital flows self-fulfilling prophecies sunspots herding behavior