TARGET GROUP | Junior to mid-level policy makers in central banks and finance ministries who have policy responsibilities related to capital account management. No prior knowledge of the material is required. Participants should have an advanced degree in economics or equivalent experience, good quantitative skills, and a basic knowledge of Excel. It is recommended that applicants have taken either the Financial Programming and Policies (FPP) or the Macroeconomic Diagnostics (MDS) course.
DESCRIPTION | This two-week course, presented by the IMF’s Institute for Capacity Development, is devoted to fostering understanding of the dynamics of capital flows and their effects on economic growth, macroeconomic volatility, and risk of crisis. The course discusses policy options available to reap the benefits of capital market integration while minimizing and mitigating its adverse effects. The course starts with a refresher on balance of payments statistics and a description of alternative measures of capital flows and financial (capital) account openness. The second part of the course introduces the determinants of capital flows and the link between these flows and economic growth, macroeconomic volatility, and crisis risk. The course concludes with a discussion of capital account management tools and how they relate to financial regulation and exchange rate intervention. The course includes case studies of actual crises so that participants will learn how policy setting and failure to recognize and address the buildup of vulnerabilities led to crisis. Throughout the course, participants are expected to engage in discussions and will work on practical workshop exercises to solidify their understanding of the lecture material.
OBJECTIVES | Upon completion of this course, participants should be able to:
• Explain the dynamics of the capital account using the balance of payments of a given country.
• Identify the financial and economic risks that a global capital market creates for economies both small and large
• Identify how policy actions can influence, or prevent. the occurrence of capital account crises and determine what challenges a country faces in attempting to stabilize the economy in different economic scenarios
• Evaluate the impact of financial reform policies on both economic growth and the risk of financial crisis
• Identify a capital account crisis and assess the associated costs
• Propose policy actions to address or avoid future crises and reduce their costs