Abstract
Do capital inflows influence domestic asset prices? This question is relevant in emerging market economies, which tend to experience a series of boom-bust cycles related to capital flows. The boom-bust cycle begins with a boom stage of credit expansion, investment increases, asset prices rises, and capital inflow surges, and ends up with a bust stage when all of those reverse. As a result, simultaneous occurrences of huge capital inflows and asset price appreciation in emerging countries have often raised concerns about the possibility of another regional economic crisis.
This chapter is reproduced from Asian Economic Journal 2009; 23(3): 323–348, with minor changes.
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© 2014 Kyuil Chung, Soyoung Kim, Hail Park, Changho Choi, and Hyun Song Shin
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Kim, S., Yang, D.Y. (2014). Do Capital Inflows Matter to Asset Prices? The Case of Korea. In: Chung, K., Kim, S., Park, H., Choi, C., Shin, H.S. (eds) Volatile Capital Flows in Korea. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137368768_3
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DOI: https://doi.org/10.1057/9781137368768_3
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