We document the behavior of macro and credit variables during episodes of capital inflows reversals in economies with … different degrees of exchange rate flexibility. We find that exchange rate flexibility is associated with milder credit growth … during the boom but, even though smaller than in more rigid regimes, it cannot shield the economy from a credit reversal …

We document the behavior of macro and credit variables during episodes of capital inflows reversals in economies with … different degrees of exchange rate flexibility. We find that exchange rate flexibility is associated with milder credit growth … during the boom but, even though smaller than in more rigid regimes, it cannot shield the economy from a credit reversal …

a massive domestic credit expansion in EMEs. These phenomena have raised concerns over potential external imbalances, as …