Veronica Cacdac Warnock

Analyses of capital flows often compare flows in a recent period to flows in some past period. But what level of capital flows should be characterised as ‘normal’? This column suggests there is a natural rate of portfolio flows, a longer-term baseline path around which actual flows fluctuate. The natural rate of portfolio flows allows observers to distinguish between movements toward the benchmark (back to ‘normal’) and movements away from the benchmark, which should be short-lived.

A large share of Turkey’s bonds are denominated in foreign currencies, and the Turkish lira has depreciated. This recalls the currency mismatches that contributed to many crises in the 1990s. The column argues that many emerging economies like Turkey's are better able to avoid these crises thanks to improved policies, such as inflation targeting, that have helped foster local currency bond markets.

Darden Professors Frank Warnock and Veronica Cacdac Warnock bring their financial acumen to bear on one of the most pressing needs in the world — adequate housing. Many developing countries suffer from “housing deficits” that the government is expected to alleviate. “A lot of countries have enormous housing backlogs — the Philippines, for example, is short 3 to 5 million units,” says Frank Warnock, an expert in financial sector development. “Many families are living in dire conditions.