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An introduction to capital controls

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The relatively recent resumption of large international capital flows and the Asian crisis have revived interest in capital controls - taxes or restrictions on international transactions in assets like stocks or bonds. For many years economists considered capital controls to be obviously detrimental to the allocation of productive resources; they have been gradually phased out in the developed world during the last 50 years. This Review article introduces readers to the debate on capital controls, explains the purposes and costs of various types of controls and why some advocate their reintroduction. Shaded inserts examine case studies in capital controls: the U.S. Interest Equalization Tax of 1963, the Chilean Encaje of the 1990s, and the restrictions imposed by Malaysia in September 1998.

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  • Christopher J. Neely, 1999. "An introduction to capital controls," Review, Federal Reserve Bank of St. Louis, vol. 81(Nov), pages 13-30.
    • Handle: RePEc:fip:fedlrv:y:1999:i:nov:p:13-30:n:v.81no.6
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    6. Carmen Reinhart, 1998. "Too much of a good thing: the macroeconomic effects of taxing capital inflows Book Title:Managing Capital Flows and Exchange Rates," Cambridge Books, Cambridge University Press, number 9780521623230-14.
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