02349cas a2200265 a 4500 AALejournalIMF012145 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475510270 1018-5941 BD-DhAAL BD-DhAAL Atoyan, Ruben. The Pre-Crisis Capital Flow Surge to Emerging Europe : Did Countercyclical Fiscal Policy Make a Difference? / Ruben Atoyan, Dustin Smith, Albert Jaeger. Washington, D.C. : International Monetary Fund, 2012. 1 online resource (34 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students A push-pull-brake model of capital flows is used to study the effects of fiscal policy changes on private capital flows to emerging Europe during 2000-07. In the model, countercyclical fiscal policy has two opposing effects on capital inflows: (i) a conventional absorptionreducing effect, as a tighter fiscal stance acts as a brake on capital flows; and (ii) an unconventional absorption-boosting effect, as a tighter fiscal stance increases investor confidence in the country. The empirical results suggest that push factors (low returns in flow-originating countries), rather than pull factors (high returns in flow-destination countries), drove most of the private capital flows to emerging Europe. And active countercyclical fiscal policy once the fiscal stance is adjusted for the automatic effects on the fiscal position of both internal and external imbalances acted as a brake on capital inflows. However, the empirical results also suggest that, even abstracting from political feasibility and fiscal policy lag considerations, countercyclical fiscal policy alone is unlikely to be an effective policy tool to put an effective brake on sudden capital flow surges. Mode of access: Internet Jaeger, Albert. Smith, Dustin. IMF Working Papers; Working Paper ; No. 2012/222 Full text available on IMF http://elibrary.imf.org/view/journals/001/2012/222/001.2012.issue-222-en.xml IMF e-Library