A notable structural change in the nature of these capital flows was the predominance of flows into domestic currency bond markets in emerging market economies, with nonresidents holding increasing proportions of domestic bonds. South Africa‘s experience was no different. In the pre-crisis period, the bulk of portfolio flows to South Africa were to the equity market.
Thanks to them and others, our general equilibrium models now feature a fully-fledged banking sector that accounts for the presence of financial frictions and that also allows us to analyse the effects of macroprudential policies. Other models address non-linearities and deal with heterogeneity across countries and economic agents. [12] And don’t forget that central banking is not only about macro-level phenomena.