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Domestic and multilateral effects of capital controls in emerging markets

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  • Bijsterbosch, Martin
  • Falagiarda, Matteo
  • Pasricha, Gurnain
  • Aizenman, Joshua

Abstract

Using a novel dataset on changes in capital controls and currency-based prudential measures in 17 major emerging market economies (EMEs) over the period 2001-2011, this paper provides new evidence on domestic and multilateral (or spillover) effects of capital controls before and after the global financial crisis. Our results, based on panel VARs, suggest that capital control actions do not allow countries to avoid the trade-offs of the monetary policy trilemma. Where they have a desired impact on the trilemma variables JEL Classification: F41, F42, F32

Suggested Citation

  • Bijsterbosch, Martin & Falagiarda, Matteo & Pasricha, Gurnain & Aizenman, Joshua, 2015. "Domestic and multilateral effects of capital controls in emerging markets," Working Paper Series 1844, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20151844
    Note: 339019
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    More about this item

    Keywords

    capital controls; capital flows; emerging market economies; monetary policy trilemma; policy spillovers;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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