Capital Controls: An Evaluation
AbstractThe literature on capital controls has (at least) four very serious apples-to-oranges problems: (i) There is no unified theoretical framework to analyze the macroeconomic consequences of controls; (ii) there is significant heterogeneity across countries and time in the control measures implemented; (iii) there are multiple definitions of what constitutes a Â“successÂ” and (iv) the empirical studies lack a common methodologyÂ—furthermore these are significantly Â“overweightedÂ” by a couple of country cases (Chile and Malaysia). In this paper, we attempt to address some of these shortcomings by: being very explicit about what measures are construed as capital controls. Also, given that success is measured so differently across studies, we sought to Â“standardizeÂ” the results of over 30 empirical studies we summarize in this paper. The standardization was done by constructing two indices of capital controls: Capital Controls Effectiveness Index (CCE Index), and Weighted Capital Control Effectiveness Index (WCCE Index). The difference between them lies only in that the WCCE controls for the differentiated degree of methodological rigor applied to draw conclusions in each of the considered papers. Inasmuch as possible, we bring to bear the experiences of less well known episodes than those of Chile and Malaysia.
Download InfoIf 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.
Bibliographic InfoPaper provided by University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number 2005-19.
Date of creation: 01 Jun 2005
Date of revision:
Contact details of provider:
Postal: 1285 University of Oregon, 435 PLC, Eugene, OR 97403-1285
Phone: (541) 346-4661
Fax: (541) 346-1243
Web page: http://economics.uoregon.edu/
More information through EDIRC
Other versions of this item:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F31 - International Economics - - International Finance - - - Foreign Exchange
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-29 (All new papers)
- NEP-FMK-2005-10-29 (Financial Markets)
- NEP-IFN-2005-10-29 (International Finance)
- NEP-MAC-2005-10-29 (Macroeconomics)
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.:
- De Gregorio, Jose & Edwards, Sebastian & Valdes, Rodrigo O., 2000.
"Controls on capital inflows: do they work?,"
Journal of Development Economics,
Elsevier, vol. 63(1), pages 59-83, October.
- Rudi Dornbusch, 2001. "Malaysia: Was it Different?," NBER Working Papers 8325, National Bureau of Economic Research, Inc.
- Isriya Nitithanprapas & Sunil Rongala & Thomas D. Willett, 2002. "The Role of Capital Controls and Currency Regimes in the Asian Crisis," Claremont Colleges Working Papers 2002-21, Claremont Colleges.
- Carmen M. Reinhart & Kenneth S. Rogoff & Miguel A. Savastano, 2003.
NBER Working Papers
9908, National Bureau of Economic Research, Inc.
- Carmen M. Reinhart & R. Todd Smith, 1996.
"Too much of a good thing: the macroeconomic effects of taxing capital inflows,"
Federal Reserve Bank of San Francisco, pages 436-464.
- Reinhart, Carmen & Smith, R. Todd, 1998. "Too much of a good thing: The macroeconomic effects of taxing capital inflows," MPRA Paper 13234, University Library of Munich, Germany.
- Francisco A. Gallego & Leonardo Hernandez & Klaus Schmidt-Hebbel, 2000.
"Capital Controls in Chile: Effective? Efficient?,"
Econometric Society World Congress 2000 Contributed Papers
0330, Econometric Society.
- Guillermo A. Calvo & Carmen M. Reinhart, 2000.
"Fear of Floating,"
NBER Working Papers
7993, National Bureau of Economic Research, Inc.
- Reinhart, Carmen & Smith, R Todd, 2002.
"Temporary controls on capital inflows,"
13863, University Library of Munich, Germany.
- Ethan Kaplan & Dani Rodrik, 2002.
"Did the Malaysian Capital Controls Work?,"
in: Preventing Currency Crises in Emerging Markets, pages 393-440
National Bureau of Economic Research, Inc.
- Kaplan, Ethan & Rodrik, Dani, 2001. "Did the Malaysian Capital Controls Work?," CEPR Discussion Papers 2754, C.E.P.R. Discussion Papers.
- Ethan Kaplan & Dani Rodrik, 2001. "Did the Malaysian Capital Controls Work?," NBER Working Papers 8142, National Bureau of Economic Research, Inc.
- Kaplan, Ethan & Rodrik, Dani, 2001. "Did the Malaysian Capital Controls Work?," Working Paper Series rwp01-008, Harvard University, John F. Kennedy School of Government.
- James Tobin, 1978.
"A Proposal for International Monetary Reform,"
Cowles Foundation Discussion Papers
506, Cowles Foundation for Research in Economics, Yale University.
- Jacques Miniane & John H. Rogers, 2007.
"Capital Controls and the International Transmission of U.S. Money Shocks,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 39(5), pages 1003-1035, 08.
- Jacques Miniane & John H. Rogers, 2003. "Capital controls and the international transmission of U.S. money shocks," International Finance Discussion Papers 778, Board of Governors of the Federal Reserve System (U.S.).
- Bernard Laurens & Jaime Cardoso, 1998. "Managing Capital Flows," IMF Working Papers 98/168, International Monetary Fund.
- Areendam Chanda, 2002.
"The Influence of Capital Controls on Long Run Growth: Where and How Much?,"
- Chanda, Areendam, 2005. "The influence of capital controls on long run growth: Where and how much?," Journal of Development Economics, Elsevier, vol. 77(2), pages 441-466, August.
- Reinhart, Carmen & Reinhart, Vincent, 1998. "“Some Lessons for Policy Makers Who Deal with the Mixed Blessing of Capital Inflows,”," MPRA Paper 7123, University Library of Munich, Germany.
- Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1994.
"The capital inflows problem: Concepts and issues,"
13902, University Library of Munich, Germany.
- Mihir A. Desai & C. Fritz Foley & James R. Hines, 2006.
"Capital Controls, Liberalizations, and Foreign Direct Investment,"
Review of Financial Studies,
Society for Financial Studies, vol. 19(4), pages 1433-1464.
- Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2004. "Capital Controls, Liberalizations, and Foreign Direct Investement," NBER Working Papers 10337, National Bureau of Economic Research, Inc.
- Akira Ariyoshi & Andrei Kirilenko & Inci Ã–tker & Bernard Laurens & Jorge IvÃ¡n Canales Kriljenko & Karl Friedrich Habermeier, 2000. "Capital Controls," IMF Occasional Papers 190, International Monetary Fund.
- Natalia T. Tamirisa, 2004. "Do Macroeconomic Effects of Capital Controls Vary by their Type? Evidence From Malaysia," IMF Working Papers 04/3, International Monetary Fund.
- 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.
- 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.
- 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.
- Eliana Cardoso & Ilan Goldfajn, 1998. "Capital Flows to Brazil: The Endogeneity of Capital Controls," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 161-202, March.
- Edison, Hali & Reinhart, Carmen M., 2001.
"Stopping hot money,"
Journal of Development Economics,
Elsevier, vol. 66(2), pages 533-553, December.
- Sebastian Edwards, 1999.
"How Effective are Capital Controls?,"
NBER Working Papers
7413, National Bureau of Economic Research, Inc.
- Natalia T. Tamirisa & R. B. Johnston, 1998. "Why Do Countries Use Capital Controls?," IMF Working Papers 98/181, International Monetary Fund.
- Montiel, Peter & Reinhart, Carmen M., 1999. "Do capital controls and macroeconomic policies influence the volume and composition of capital flows? Evidence from the 1990s," Journal of International Money and Finance, Elsevier, vol. 18(4), pages 619-635, August.
- Sebastian Edwards & Roberto Rigobon, 2005. "Capital Controls, Exchange Rate Volatility and External Vulnerability," NBER Working Papers 11434, National Bureau of Economic Research, Inc.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral 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: (Bill Harbaugh).
If references are entirely missing, you can add them using this form.