Akademik Veri Yönetim Sistemi
Ege Akademik Bakış, cilt.25, sa.2, ss.395-416, 2025 (ESCI, TRDizin)
Sterilization policies aim to prevent the overvaluation of the national currency due to high capital inflows and the resulting inflationary effects from increased money supply. Emerging Market Economies (EMEs) faced instability from large capital inflows during the 1990s and 2000s, leading to the adoption of sterilization policies. With this motivation, this paper examines the extent and effectiveness of sterilization measures in 13 EMEs for the period 2005Q1-2021Q4. While the extent of sterilization measures is analyzed using the Instrumental Variables GMM technique, the effectiveness of these policies against different types of capital inflows is investigated using quantile regression analysis. The use of the Instrumental Variables GMM technique contributes methodologically to the literature as it produces more precise and robust results. In investigating the effectiveness of sterilization policies, in addition to the general types of capital inflows, gross portfolio equity and portfolio debt inflows and alternative definitions of capital inflows (gross debt and equity-based) make important contributions to the economic literature. The GMM results indicate the existence of partial sterilization and suggest that full sterilization was not implemented to reduce economic costs and promote domestic economic stability. Quantile regression analysis reveals that sterilization measures are particularly effective against short-term private capital inflows.