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Destabilizing Capital Flows amid Global Inflation

Julien Bengui & Louphou Coulibaly

The Review of Economic Studies2026https://doi.org/10.1093/restud/rdag007article
FT50AJG 4*ABDC A*
Weight
0.50

What the paper says

Over the latest monetary policy tightening cycle, capital has been flowing from low-inflation countries to high-inflation countries. This pattern of capital flows is consistent with the predictions of an open-economy model with nominal rigidities where cost-push shocks generate an inflationary episode and capital flows freely across countries. Yet, by raising demand for domestic non-tradable goods and services, capital inflows cause unwelcome upward pressure on firms’ costs in countries most severely hit by these shocks. We find that a reverse pattern of capital flows would have improved the output-inflation trade-off globally, hence requiring a less aggressive monetary tightening in the most severely hit countries and delivering overall welfare gains.

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https://doi.org/https://doi.org/10.1093/restud/rdag007

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@article{julien2026,
  title        = {{Destabilizing Capital Flows amid Global Inflation}},
  author       = {Julien Bengui & Louphou Coulibaly},
  journal      = {The Review of Economic Studies},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1093/restud/rdag007},
}

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Destabilizing Capital Flows amid Global Inflation

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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