How Effective are Capital Controls?
AbstractIn the aftermath of the East Asian crisis a number of authors have argued that capital mobility is highly destabilizing, and that emerging countries would benefit from restricting capital flows. In this paper I investigate, from a historical perspective, the effectiveness of capital controls. I deal with Tobin taxes, controls on outflows and controls on inflows. I argue that controls on outflows have seldom worked as expected. They introduce major distortions and breed corruption. Market-based controls on inflows - similar to those implemented by Chile - have the potential for lengthening the maturity of foreign debt. They are not very effective, however, in achieving other objectives, including a higher degree of monetary policy independence.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7413.
Date of creation: Nov 1999
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Publication status: published as Journal of Economic Perspectives, Vol. 13, no. 4 (Fall 1999): 65-84.
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Other versions of this item:
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- 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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