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Abstract

This paper studies the experience with the use of capital controls in Chile during the 1990s. Rather than revisiting previous studies, it complements previous research by providing, for the first time, empirical evidence on some of the microeconomic effects of capital controls, in particular, the unremunerated reserve requirement (URR). By looking at financial statements for a group of 73 Chilean firms during 1986-2001, the paper attempts to identify the effects of the URR on the firms’ costs and ways of financing. Chilean firms are grouped by economic sector, size and access to international capital markets. Results show that the effects of the URR are firm specific; forinstance, there are striking differences in the response to the URR among firms of different size and those with or without access to international capital markets.

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Bibliographic Info

Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 203.

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Date of creation: Feb 2003
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Handle: RePEc:chb:bcchwp:203

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This paper has been announced in the following NEP Reports:

• NEP-ALL-2003-03-25 (All new papers)
• NEP-FIN-2003-03-25 (Finance)
• NEP-HIS-2003-03-25 (Business, Economic & Financial History)
• NEP-IFN-2003-03-25 (International Finance)
• NEP-LAM-2003-03-25 (Central & South America)
• NEP-MIC-2003-03-25 (Microeconomics)

References

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21. Leonardo Hernández & Klaus Schmidt-Hebbel, 2002. "Banking, Financial Integration, and International Crises: An Overview," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (S (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 1, pages 001-030 Central Bank of Chile.
    
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:

1. En defensa de los controles de capital
   by Eduardo Levy-Yeyati in Foco Económico on 2010-12-15 12:00:00

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Cited by:

1. Forbes, Kristin J., 2004. "Capital Controls: Mud in the Wheels of Market Discipline," Working papers 4454-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
   
   • Kristin J. Forbes, 2004. "Capital Controls: Mud in the Wheels of Market Discipline," NBER Working Papers 10284, National Bureau of Economic Research, Inc.
2. Karl Friedrich Habermeier & Annamaria Kokenyne & Chikako Baba, 2011. "The Effectiveness of Capital Controls and Prudential Policies in Managing Large Inflows," IMF Staff Discussion Notes 11/14, International Monetary Fund.
3. Oscar Landerretche Moreno, 2007. "Creation and Destruction: Evidence from an Emerging Market," Working Papers wp246, University of Chile, Department of Economics.
4. Peter Blair Henry, 2007. "Capital Account Liberalization: Theory, Evidence, and Speculation," Journal of Economic Literature, American Economic Association, vol. 45(4), pages 887-935, December.
   
   • Henry, Peter B., 2007. "Capital Account Liberalization: Theory, Evidence, and Speculation," Research Papers 1974, Stanford University, Graduate School of Business.
   • Peter Blair Henry, 2006. "Capital account liberalization: theory, evidence, and speculation," Working Paper Series 2007-32, Federal Reserve Bank of San Francisco.
   • Peter Blair Henry, 2006. "Capital Account Liberalization: Theory, Evidence, and Speculation," NBER Working Papers 12698, National Bureau of Economic Research, Inc.
   • Henry, Peter B., 2006. "Capital Account Liberalization: Theory, Evidence, and Speculation," Research Papers 1951, Stanford University, Graduate School of Business.
5. Sebastián Edwards, 2006. "Managing the Capital Account," Central Banking, Analysis, and Economic Policies Book Series, in: Ricardo Caballero & César Calderón & Luis Felipe Céspedes & Norman Loayza (Series Editor) & Klaus (ed.), External Vulnerability and Preventive Policies, edition 1, volume 10, chapter 9, pages 289-326 Central Bank of Chile.
6. Peter Henry, 2007. "Capital Account Liberalization: Theory, Evidence, and Speculation," Discussion Papers 07-004, Stanford Institute for Economic Policy Research.
7. Jonathan David Ostry & Mahvash Saeed Qureshi & Karl Friedrich Habermeier & Dennis B. S. Reinhardt & Marcos Chamon & Atish R. Ghosh, 2010. "Capital Inflows: The Role of Controls," IMF Staff Position Notes 2010/04, International Monetary Fund.
8. Forbes, Kristin J., 2003. "One Cost of the Chilean Capital Controls: Increased Financial Constraints for Smaller Traded Firms," Working papers 4273-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
   
   • Forbes, Kristin J., 2007. "One cost of the Chilean capital controls: Increased financial constraints for smaller traded firms," Journal of International Economics, Elsevier, vol. 71(2), pages 294-323, April.
   • Kristin J. Forbes, 2003. "One Cost of the Chilean Capital Controls: Increased Financial Constraints for Smalles Traded Firms," NBER Working Papers 9777, National Bureau of Economic Research, Inc.
9. Kristin J. Forbes, 2005. "The Microeconomic Evidence on Capital Controls: No Free Lunch," NBER Working Papers 11372, National Bureau of Economic Research, Inc.
   
   • Kristin J. Forbes, 2007. "The Microeconomic Evidence on Capital Controls: No Free Lunch," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, pages 171-202 National Bureau of Economic Research, Inc.
10. Rodrigo Cifuentes & Jorge Desormeaux, 2005. "Monetary policy and financial integration: the case of Chile," BIS Papers chapters, in: Bank for International Settlements (ed.), Globalisation and monetary policy in emerging markets, volume 23, pages 109-23 Bank for International Settlements.
11. Hartwell, Christopher A., 2011. "All That’s Old is New Again: Capital Controls and the Macroeconomic Determinants of Entrepreneurship in Emerging Markets," MPRA Paper 40257, University Library of Munich, Germany.
12. Dmytro Boyarchuk & Inna Golodniuk & Mykyta Mykhaylychenko & Wojciech Paczynski & Anna Tsarenko & Vitaly Vavryschuk, 2006. "Prospects for EU-Ukraine Economic Relations," CASE Network Reports 0066, CASE-Center for Social and Economic Research.
13. VALENZUELA, Patricio, 2012. "Essays on the Cost of Debt Capital for Private Firms," Open Access publications from European University Institute urn:hdl:1814/22074, European University Institute.
14. Oscar Landerretche, 2007. "Job flows in chile," Working Papers wp240, University of Chile, Department of Economics.

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