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Capital Controls in the 21st Century

Listed author(s):
  • Eichengreen, Barry
  • Rose, Andrew

Governments have rarely imposed or removed capital controls in response to short-term fluctuations in output, the terms of trade, or financial-stability considerations. We show empirically that controls on the international flow of financial capital are highly durable, often remaining in place for decades; their duration is striking compared with related phenomena such as exchange rate regimes. This represents a challenge to any proposed use of capital controls as an instrument of macroeconomic and macro-prudential management, since we have little experience in using capital controls at high- or medium frequencies. Any new policy initiative mandating frequent shifts in controls will be based on theory rather than data-driven experience.

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File URL: http://www.sciencedirect.com/science/article/pii/S0261560614001235
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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 48 (2014)
Issue (Month): PA ()
Pages: 1-16

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Handle: RePEc:eee:jimfin:v:48:y:2014:i:pa:p:1-16
DOI: 10.1016/j.jimonfin.2014.08.001
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30443

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  24. Krugman, Paul, 1982. "The macroeconomics of protection with a floating exchange rate," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 16(1), pages 141-182, January.
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