Advanced Search
MyIDEAS: Login to save this paper or follow this series

Capital Controls: Gates versus Walls

Contents:

Author Info

  • Michael W. Klein

Abstract

This paper examines the pattern of controls on capital inflows, and the association of these controls on financial variables, GDP, and exchange rates. A key point of the paper is the distinction between long-standing controls on a broad range of assets (walls) and episodic controls that are imposed and removed, and tend to be on a narrower set of assets (gates). The paper presents a new data set that differentiates between controls on different categories of assets for a set of 44 advanced and emerging market economies over the 1995 to 2010 period. The imposition of episodic controls is found to not follow the prescriptions of theories that suggest first imposing controls on international asset inflows that are most likely to contribute to financial vulnerability. Estimates show significant differences in the partial correlations of long-standing and episodic controls with the growth of financial variables and with GDP growth, but these differences seem to arise because countries with long-standing controls are poorer than the other countries in the sample. With a few exceptions, there is little evidence of the efficacy of capital controls on the growth of financial variables, the real exchange rate, or GDP growth at an annual frequency. These preliminary results raise doubts about assumptions behind recent calls for a greater use of episodic controls on capital inflows.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/papers/w18526.pdf
Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18526.

as in new window
Length:
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:nbr:nberwo:18526

Note: IFM
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. Maurice Obstfeld, 1992. "Risk-Taking, Global Diversification, and Growth," NBER Working Papers 4093, National Bureau of Economic Research, Inc.
  2. Kristin J. Forbes & Francis E. Warnock, 2011. "Capital Flow Waves: Surges, Stops, Flight, and Retrenchment," NBER Chapters, in: Global Financial Crisis National Bureau of Economic Research, Inc.
  3. Martin Schindler, 2009. "Measuring Financial Integration: A New Data Set," IMF Staff Papers, Palgrave Macmillan, vol. 56(1), pages 222-238, April.
  4. Jay C. Shambaugh, 2004. "The Effect of Fixed Exchange Rates on Monetary Policy," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(1), pages 300-351, February.
  5. Olivier Jeanne & Arvind Subramanian & John Williamson, 2012. "Who Needs to Open the Capital Account?," Peterson Institute Press: All Books, Peterson Institute for International Economics, Peterson Institute for International Economics, number 5119, July.
  6. De Gregorio, Jose & Edwards, Sebastian & Valdes, Rodrigo O., 2000. "Controls on capital inflows: do they work?," Journal of Development Economics, Elsevier, Elsevier, vol. 63(1), pages 59-83, October.
  7. Lawrence H. Summers, 2000. "International Financial Crises: Causes, Prevention, and Cures," American Economic Review, American Economic Association, American Economic Association, vol. 90(2), pages 1-16, May.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Eichengreen, Barry & Kawai, Masahiro, 2014. "Issues for Renminbi Internationalization: An Overview," ADBI Working Papers, Asian Development Bank Institute 454, Asian Development Bank Institute.
  2. Andreas Hoffmann & Axel Loeffer, 2014. "Low Interest Rate Policy and the Use of Reserve Requirements in Emerging Markets," ICER Working Papers, ICER - International Centre for Economic Research 01-2014, ICER - International Centre for Economic Research.
  3. Yothin Jinjarak & Ilan Noy & Huanhuan Zheng, 2013. "Capital Controls in Brazil – Stemming a Tide with a Signal?," NBER Working Papers 19205, National Bureau of Economic Research, Inc.
  4. Franziska Bremus & Claudia M. Buch, 2013. "Granularity in Banking and Growth: Does Financial Openness Matter?," Discussion Papers of DIW Berlin 1346, DIW Berlin, German Institute for Economic Research.
  5. Joshua Aizenman & Gurnain Pasricha, 2013. "Why Do Emerging Markets Liberalize Capital Outflow Controls? Fiscal versus Net Capital Flow Concerns," Working Papers, Bank of Canada 13-21, Bank of Canada.
  6. Christian Saborowski & Sarah Sanya & Hans Weisfeld & Juan Yepez, 2014. "Effectiveness of Capital Outflow Restrictions," IMF Working Papers 14/8, International Monetary Fund.
  7. Olivier Jeanne, 2014. "Macroprudential Policies in a Global Perspective," IMES Discussion Paper Series 14-E-01, Institute for Monetary and Economic Studies, Bank of Japan.
  8. von Hagen, Jürgen & Zhang, Haiping, 2014. "Financial development, international capital flows, and aggregate output," Journal of Development Economics, Elsevier, Elsevier, vol. 106(C), pages 66-77.
  9. Eichengreen, Barry, 2013. "Currency war or international policy coordination?," Journal of Policy Modeling, Elsevier, Elsevier, vol. 35(3), pages 425-433.
  10. Davis, Scott & Presno, Ignacio, 2014. "Capital controls as an instrument of monetary policy," Globalization and Monetary Policy Institute Working Paper, Federal Reserve Bank of Dallas 171, Federal Reserve Bank of Dallas.
  11. Claudia Buch & Iris Kesternich & Alexander Lipponer & Monika Schnitzer, 2014. "Financial constraints and foreign direct investment: firm-level evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 150(2), pages 393-420, May.
  12. Jinjarak, Yothin & Noy, Ilan & Zheng, Huanhuan, 2013. "What Lessons Can Asia Draw from Capital Controls in Brazil during 2008–2012?," ADBI Working Papers, Asian Development Bank Institute 423, Asian Development Bank Institute.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:18526. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.