Are price-based capital account regulations effective in developing countries ?
AbstractThe author evaluates the effectiveness of policy measures adopted by Chile and Colombia, aiming to mitigate the deleterious effects of pro-cyclical capital flows. In the case of Chile, according to his Generalized Method of Moments (GMM) analysis, capital controls succeeded in reducing net short-term capital flows but did not affect long-term flows. As far as Colombia is concerned, the regulations were capable of affecting total flows and also long-term ones. In addition, the co-integration models indicate that the regulations did not have a direct effect on the real exchange rate in the Chilean case. Nonetheless, the model used for Colombia did detect a direct impact of the capital controls on the real exchange rate. Therefore, the results do not seem to support the idea that those regulations were easily evaded.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4175.
Date of creation: 01 Mar 2007
Date of revision:
Macroeconomic Management; Capital Flows; Economic Theory&Research; Economic Stabilization; Financial Economics;
Other versions of this item:
- Antonio David, 2009. "Are price-based capital account regulations effective in developing countries?," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 41(26), pages 3375-3388.
- NEP-ALL-2007-03-31 (All new papers)
- NEP-DEV-2007-03-31 (Development)
- NEP-IFN-2007-03-31 (International Finance)
- NEP-MAC-2007-03-31 (Macroeconomics)
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