Do Capital Flows Matter for Monetary Policy Setting in Inflation Targeting Economies?

Bruce Morley, Trinil Arimurti

Research output: Contribution to journalArticle


The aim of this study is to determine if capital flows can account for the international effects on domestic monetary policy, using an augmented Taylor rule model. In addition to the standard determinants of nominal interest rates, we include capital flow measures to show how central banks consider this important factor when deciding on the most appropriate monetary policy. Using a panel of inflation targeting economies and the dynamic panel approach, this study finds that capital inflows and outflows are an important determinant of nominal interest rates.
Original languageEnglish
Pages (from-to)1-16
Number of pages16
JournalJournal of Risk and Financial Management
Publication statusIn preparation - 24 Jul 2020


  • capital flows
  • Taylor rule
  • dynamic models

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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