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Are capital controls countercyclical?

Author

Listed:
  • Fernández, Andrés
  • Rebucci, Alessandro
  • Uribe, Martín

Abstract

A growing theoretical literature advocates the use of countercyclical capital control policy, that is, the tightening of restrictions on net capital inflows during booms and the relaxation thereof during recessions. We examine the behavior of capital controls in 78 countries over the period 1995–2011. We find that capital controls are remarkably acyclical. Booms and busts in aggregate activity are associated with virtually no movements in capital controls. These results are robust to controlling for the level of development, external indebtedness, and the exchange-rate regime. They also obtain around the great contraction of 2007.

Suggested Citation

  • Fernández, Andrés & Rebucci, Alessandro & Uribe, Martín, 2015. "Are capital controls countercyclical?," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 1-14.
  • Handle: RePEc:eee:moneco:v:76:y:2015:i:c:p:1-14
    DOI: 10.1016/j.jmoneco.2015.07.001
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gina Christelle Pieters, 2017. "Bitcoin Reveals Exchange Rate Manipulation and Detects Capital Controls," 2017 Papers ppi307, Job Market Papers.
    2. Radhika Pandey & Gurnain Pasricha & Ila Patnaik & Ajay Shah, 2015. "Motivations for Capital Controls and Their Effectiveness," Staff Working Papers 15-5, Bank of Canada.
    3. repec:mtp:titles:0262037165 is not listed on IDEAS
    4. Benigno, Gianluca & Chen, Huigang & Otrok, Christopher & Rebucci, Alessandro & Young, Eric R., 2016. "Optimal capital controls and real exchange rate policies: A pecuniary externality perspective," Journal of Monetary Economics, Elsevier, vol. 84(C), pages 147-165.
    5. Shigeto Kitano & Kenya Takaku, 2017. "Capital Controls, Macroprudential Regulation,and the Bank Balance Sheet Channel," Discussion Paper Series DP2017-18, Research Institute for Economics & Business Administration, Kobe University, revised Jun 2018.
    6. Di Casola, Paola & Sichlimiris, Spyridon, 2017. "Domestic and External Sovereign Debt," Working Paper Series 345, Sveriges Riksbank (Central Bank of Sweden).
    7. Lorenzo Menna & Martin Tobal, 2018. "Financial and price stability in emerging markets: the role of the interest rate," BIS Working Papers 717, Bank for International Settlements.
    8. Kuersteiner, Guido M. & Phillips, David C. & Villamizar-Villegas, Mauricio, 2018. "Effective sterilized foreign exchange intervention? Evidence from a rule-based policy," Journal of International Economics, Elsevier, vol. 113(C), pages 118-138.
    9. repec:eee:inecon:v:109:y:2017:i:c:p:43-67 is not listed on IDEAS
    10. Nadav Ben Zeev, 2017. "Exchange Rate Regimes And Sudden Stops," Working Papers 1712, Ben-Gurion University of the Negev, Department of Economics.
    11. Tobal Martín, 2017. "Prudential Regulation, Currency Mismatches and Exchange Rates in Latin America and the Caribbean," Working Papers 2017-21, Banco de México.

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