After the financial liberalization in 1990, private capital flows play an important role in Thai economy. Therefore, this paper tried to explore the response pattern of net private capital to monetary polices in order to find the policy strategies for managing private capital flows in the future. By using monthly data of Thai economy from January 1990 to May 2001 and applying Generalized Impulse Function method, we find that net private capital flows did not show the significant response pattern to monetary polices. But the size of responses pattern between private capital flows and monetary policies increased after using managed floating exchange rate system, which can be explained by Mundell-Flemming model. Moreover, we also find that the most effective monetary policy instrument is interbank rate. Finally, from the result of this study, we can conclude that the most effective monetary policy under managed float exchange rate system is interest rate.
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