Last week I did a thread, in Spanish, on a presentation by @HyunSongShin at the #YSILatinAmericanConvening in Buenos Aires. Here goes the English translation. Some things are already known to people who follow Shin's work. So be it. @MacroPru
A) Flexible exchange rates are not shock absorbers, they do not equilibrate the current account or BoP, particularly in a world with global value chains. FX intervention is ok, and is fruitful (when it is applied well in a competent fashion, unlike the Argentine Central Bank).
B) One needs to think of capital controls as another tool in broader policy mix, that includes macroprudential policies. But they are useful, with a righteous place in that toolbox.
C) The current account is not so informative, the magnitudes of gross flows are equally important, if not more. And one should look also to the nationality of agents, not only their residence.
D) K flows, particularly bank loans, are explained more by the "broad or global USD ER" (weighted by debt) than the bilateral USD ER. Global (push) factors have a higher weight than domestic (pull), because most of the global USD-denominated credit is NOT lent by US institutions.
This sums up what I took from @HyunSongShin' presentation at the @ysi_commons event. If I'm wrong, perhaps he can correct me. @MacroPru @DanielaGabor @anninak82 @BBonizzi
