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Review Essay: Is a Chilean-Style Tax on Short-Term Capital Inflows Stabilizing?

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Author Info
Michael Ulan ()
Abstract

In the wake of the 1997–1998 East Asian financial crisis, some economists recommended that affected countries adopt a Chilean-style tax on short-term capital inflows to maintain domestic macroeconomic stability. In Chile, the tax reduced capital inflows lengthened the maturity of inflows, and maintained interest rates at levels designed to avoid overheating—but not costlessly. Aside from second-best arguments, such a tax is justified as a temporary measure to buy time to reform and introduce prudential regulation and supervision of a country's financial system. Would dirigiste economies use the tax to facilitate reforms and remove it after effecting prudential regulation? Copyright Kluwer Academic Publishers 2000

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Publisher Info
Article provided by Springer in its journal Open Economies Review.

Volume (Year): 11 (2000)
Issue (Month): 2 (April)
Pages: 149-177
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Handle: RePEc:kap:openec:v:11:y:2000:i:2:p:149-177

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Related research
Keywords: capital controls; Chile; monetary policy;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. James Tobin, 1978. "A Proposal for International Monetary Reform," Eastern Economic Journal, Eastern Economic Association, vol. 4(3-4), pages 153-159, Jul/Oct. [Downloadable!]
    Other versions:
  2. Eichengreen, Barry & Tobin, James & Wyplosz, Charles, 1995. "Two Cases for Sand in the Wheels of International Finance," Economic Journal, Royal Economic Society, vol. 105(428), pages 162-72, January. [Downloadable!] (restricted)
    Other versions:
  3. repec:chb:bcchwp:06 is not listed on IDEAS
  4. Giovanni Dell'Ariccia & Enrica Detragiache & Michael Mussa & Barry J. Eichengreen, 1998. "Capital Account Liberalization: Theoretical and Practical Aspects," IMF Occasional Papers 172, International Monetary Fund.
  5. Michael P. Dooley, 1995. "A Survey of Academic Literature on Controls over International Capital Transactions," NBER Working Papers 5352, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Reinhart, Carmen & Reinhart, Vincent, 1999. "On the use of reserve requirements in dealing with capital flow problems," MPRA Paper 13703, University Library of Munich, Germany. [Downloadable!]
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  7. Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1994. "The capital inflows problem: Concepts and issues," MPRA Paper 13902, University Library of Munich, Germany. [Downloadable!]
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  8. Salvador Valdés-Prieto & Marcelo Soto, 1998. "The Effectiveness of Capital Controls: Theory and Evidence from Chile," Empirica, Springer, vol. 25(2), pages 133-164, January. [Downloadable!] (restricted)
  9. Leonardo Bartolini & Allan Drazen, 1997. "Capital Account Liberalization as a Signal," NBER Working Papers 5725, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Richard N. Cooper, 1999. "Should Capital Controls be Banished?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(1999-1), pages 89-142. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dr Anthony J. Makin & Alexander Robson, 2002. "The Welfare Cost Of Capital Immobility And Capital Controls," Discussion Papers Series 318, School of Economics, University of Queensland, Australia. [Downloadable!]
  2. Francisco A. Gallego F & Leonardo Hernández, 2003. "Microeconomic Effects of Capital Controls: The Chilean Experience During the 1990s," Working Papers Central Bank of Chile 203, Central Bank of Chile. [Downloadable!]
    Other versions:
  3. Makin, Tony & Robson, Alexander, 2006. "The Welfare Cost of Capital Controls," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 36(1-2), pages 13-24, March/Sep. [Downloadable!]
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