Mesut Yılmaz2025-11-042025-11-042007Mesut Yılmaz / Macroeconomic Effects of Capital Flows: Kazakhstan Case / Suleyman Demirel University / Сду хабаршысы, 2007https://repository.sdu.edu.kz/handle/123456789/2126This article examines the macroeconomic effects of capital flows, with a particular focus on Kazakhstan. The study first explains different definitions of capital flows as movements of international funds across borders, including foreign direct investment and short-term capital. It highlights that opening the capital account requires certain economic preconditions, such as stable inflation, disciplined fiscal policy, and strong financial institutions. The article reviews theoretical perspectives on how capital inflows affect key macroeconomic variables, including inflation, investment, exchange rates, and the current account balance. Depending on the exchange rate regime, capital inflows may lead to real exchange rate appreciation and expansion in domestic demand. The paper also discusses the policy dilemma known as the “impossible trinity,” where a country cannot maintain free capital movement, fixed exchange rates, and an independent monetary policy simultaneously. Using data from Kazakhstan, the article shows that foreign direct investment has played a significant role in supporting economic growth and external stability.enAttribution-NonCommercial-ShareAlike 4.0 Internationalcapital flowsmoney movementexchange rateinflationfiscal policycurrent accounteconomyArticle